Carphone Warehouse Rises on Dividend Prospects: London Mover

Carphone Warehouse Group Plc (CPW) rose to the highest price in almost 10 months in London trading after Chief Executive Officer Roger Taylor said Europe’s largest mobile-phone retailer will consider raising dividends next year.

Sales prospects for the holiday season are the best in at least three years with the widespread availability of smartphones that cost less than 100 pounds ($159), Taylor said today in a telephone interview.

“I am more optimistic about consumers this Christmas than for the last couple of years,” Taylor said. “I think smartphones will genuinely become stocking fillers for Christmas. It definitely feels much better.”

Carphone Warehouse is paying dividends out of group resources rather than earnings and today left its interim payout unchanged at 1.75 pence a share. It will review the policy next year as it starts receiving dividends from the Carphone Warehouse Europe venture, Taylor said in the interview. Bloomberg’s projection for the shareholder payment to be declared in June 2013 is 3.25 pence, the same as a year earlier.

The shares rose 4.8 percent to 184 pence, the highest since Jan. 27, extending the gain this year to 24 percent. It was the fourth-best performer in the FTSE U.K. All Cap Index. Charles Dunstone, the founder and chairman of Carphone, owns 28 percent of the company, according to data compiled by Bloomberg.

Revenue at Carphone Warehouse Europe rose 1.6 percent on a same-store basis in the six months ended Sept. 30, as sales gained momentum in the second quarter, the company said today in a statement. The retailer reiterated full-year guidance for earnings before interest and taxes at the venture, which it shares with Best Buy Co. (BBY), of as much as 150 million pounds.

Buyout Offer

Best Buy has resisted recent buyout overtures from founder Richard Schulze, who resigned as chairman in June. Schulze, 71, offered to take the company private at $24 to $26 a share two months later and has since reached an agreement with the company on conducting due diligence for a possible deal.

A buyout would give Carphone Warehouse the right to buy the 50 percent of Carphone Warehouse Europe it doesn’t own at a 10 percent discount, Richard Chamberlain, an analyst at Bank of America Merrill Lynch, said in a note Nov. 9. That would probably boost earnings by more than 10 percent, he said.

“The matter is out of our hands,” Taylor said in an e-mailed response to a question. “Clearly an awful lot of hurdles would have to be negotiated before such a situation arose but we will examine any opportunity that presents itself.”

Carphone Warehouse’s first-half adjusted pretax profit rose 30 percent to 8.6 million pounds, slightly ahead of a prediction by Chamberlain.

The company “should be well-placed to benefit from a stronger product cycle going forward,” said the London-based analyst, who last week raised his recommendation on the stock to neutral.

More than 1 million Carphone Warehouse shares traded, almost four times the three-month daily average.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net

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