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Carphone Warehouse plc, Europe's largest mobile phone retailer, said the closures and other reorganisation moves will cost around STG70 million in one-time costs and the UK-based company also announced Hans Snook, Orange SA's former chief executive, as its new chairman. In that role he will replace Charles Dunstone, who will stay on as the company's chief executive officer.
Throughout Europe the company has around 670 shops, with an additional 430 in the UK.
Thirty of the shops to be closed are in Germany and seven are in Belgium, with the remainder to be closed throughout Europe. The company did not say how many jobs would be lost as a result, and spokespeople for the company could not confirm whether Irish shops would be shut.
In Ireland the Carphone Warehouse currently employs around 200 in its 40 branches nationwide. Throughout Europe, the company has around 670 shops, with an additional 430 in the UK.
Despite the decision to shut the 89 locations, however, the company said that it had plans to open 100 new stores throughout Europe in the coming year. But unlike many of its older shops, these new stores will be on arterial routes, out-of-town retail parks and shopping centre locations.
Other restructuring moves include its intention to enter into a sale and lease back of the Group's Support Centre in Acton, expected to generate cash in excess of STG36 million and a profit of approximately STG16 million.
The announcement, ahead of the firm's financial statement for the year ending 30 March, said that the company's profit before tax is expected to be in accordance with the previous guidance given in January of STG45 million to STG50 million. Other figures released by the mobile phone retailer said that UK connections were 339,000 compared to 358,000 last year and European connections were 235,000 compared to 229,000 last year.
On the back of the news, the company's stock closed up almost two percent to STG0.9275 in London on Monday.
Mobile phone retailers like Carphone Warehouse are experiencing a downturn in the mobile industry similar to that faced by mobile operators. Traditionally, pre-paid mobile customers have led sales, but as that market becomes saturated, retailers must find new ways to drive revenues.
"The mobile phone business has changed dramatically in the past 18 months and will continue to change further," explained CEO Charles Dunstone. "We feel very confident that mobile data will be adopted on a significant scale, however, its introduction and adoption may take longer than many have traditionally thought. The first really encouraging signs are likely to be seen during 2003."
Developing these revenue streams, especially telecoms services, has increasingly become a significant part of the business, Dunstone said. He went on to say that offering these services alongside new handsets will become critical to the company's success.
This new strategy from Europe's biggest mobile phone retailer should please mobile operators who will also see more revenues from the sale of new services.
Carphone Warehouse said that it planned both a deepening and a widening of its relationship with the operators in the provision of new services.
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