Sales rise at Carphone Warehouse as customers pick up smartphones

The group, which jointly owns its retail business with US partner Best Buy, posted like-for-like growth of 3.7 per cent in the 13 weeks to 3 July, beating City expectations.

The launch of new products such as Apple's iPhone 4 boosted demand in the smartphone sector.

However, the sales advance was offset by a 1.1 per cent drop in connections, which Carphone said was due to a reduction in sales of lower-value pre-pay phones.

Overall, the company said it was confident of achieving full-year results guidance issued in April.

The group has been boosted by a "very successful" launch of its first Best Buy electronics megastores in Essex, Hampshire and the West Midlands.

The "Big Box" stores offer initiatives such as a trade-in service where customers can receive discounts when they bring in their old televisions, laptops and mobile phones. A further three stores will open later in the year, together with an online service.

Carphone, which has 2,450 stores across nine European countries, is currently refitting some of its larger stores to accommodate its Wireless World format, which provides a wider product mix.

It hopes to have 100 such stores by March as Carphone rolls out its Connected World service offering a broader range of laptops and accessories, as well as gaming, audio and other entertainment products.

Roger Taylor, chief executive of Europe's biggest independent mobile phone retailer, said he did not expect a big improvement in consumer demand for the foreseeable future, though he thought Europe would not slide back into recession.

He added: "It feels like we can continue for the rest of this year and into the first half of next year with the benign environment we've got, and consumers seem quite resilient to that."

Taylor said strong sales of the iPhone and Research In Motion's Blackberry products had been joined by demand for devices using Google's Android software, and that Microsoft's new software platform would spark another wave of new products later this year.

He added: "We're in an interesting place of product development and we're undoubtedly doing well on the back of that."

DSG International, which owns the Currys and PC World chains, has responded to Carphone's expansion by opening its own megastores.

The company said on Monday it had agreed a deal for Carphone's rival Phones 4u to roll out at least 50 "shop in shops" in larger stores.

But Taylor was relaxed about the challenge. He said: "I don't see that (the Phones 4u deal] as a threat at all to what we do."

Credit Suisse analysts noted that there was "encouraging progress" within Carphone's core divisions.

Carphone de-merged its consumer telephone business, TalkTalk, in March, with TalkTalk also listing on the stock exchange.