BURNABY – Despite a 23% bump in sales, Glentel saw profits fall by over $1 million in the first quarter of 2012.
The multi-carrier mobile phone retailer reported net income of $3.27 million for the period ended March 31, 2012, compared to $4.75 million in the same quarter in 2010. Consolidated sales were $148.3 million, up year-over-year from $121.1 million.
Sales of retail mobile phone products and services in Glentel’s Retail Canada division grew 18% to $90.6 million over $77.0 million in the prior year, which it attributed to the increased mix of smart phones and tablets sold having higher selling prices and cost of goods to purchase than traditional feature phones.
“The competitive landscape has forced our carrier partners to introduce programs that generate lower monthly service fees and shorter terms in order to compete with the new entrants”, reads Glentel’s financial report. “These types of programs yield lower than normal commission rates, which impacted overall margins in the 1st quarter.”
The company’s U.S. division saw sales jump 38% to $50.3 million from $36.4 million in the first quarter of 2011. Its business division sales of terrestrial narrowband and broadband radio systems, satellite network services, and implementation services dipped 2% to $7.5 million from $7.6 million.
"We are pleased to report a stellar sales performance in our first quarter, year over year in both Canada and the United States, reflecting sales growth of smartphones and tablets while opening new stores", said president and CEO Thomas Skidmore, in a statement.
"However, our year over year retail margins decreased this quarter as a consequence of certain of our wireless providers contributing less compensation to its distributors for the acquisition or retention of some new and upgrading customers who in January and February were enticed to low cost / low commitment smartphone and data plan offerings by some wireless providers.”
