Phones 4u sales to take a hit as Vodafone cancels contract

Phones 4u has been hit with another setback, after Vodafone announced plans to withdraw products from its stores from February 2015.

O2 and Three have also recently withdrawn their devices from Phone 4u outlets, meaning the firm can now only stock products from Orange, EE, T-Mobile, Virgin Mobile and its own brand, LIFE Mobile.

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Vodafone confirmed that it will not be renewing its contract with the company, following the decision to revamp its UK distribution strategy.

CEO of Phones 4u, David Kassler, said that, while he was disappointed by Vodafone's decision, the company are in discussions with other partners in preparation for the withdrawal.

"We have high levels of market share, especially in the youth segment, and our own network LIFE Mobile (launched in 2013) is now fully road-tested and enjoying a great first year with customer growth ahead of our expectations," he said.

"Both transactions and search traffic through our new mobile commerce site are growing rapidly as customers increasingly look to begin their purchase journey online, and they are continuing to choose to shop with Phones 4u because of the great service and value they get across all channels."

Despite Kassler's optimism, the loss of Vodafone is expected to be a major blow to the company. According to the firm's financial reports, Vodafone represented 27 per cent of the company's contract sales and 16 per cent of its pay-as-you-go sales during the 12 months prior to 31 July 2014.

Following the announcement, a Vodafone statement indicated that the firm would be opening an additional 150 stores and creating 1,400 new jobs as part of its new distribution strategy.

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"Vodafone today confirms that it will be enhancing its distribution partnership with Dixons Carphone from early next year and will not be extending its existing contract with Phones4u, which expires in February 2015," the statement added