Carphone owner dials up mixed numbers

Currys and PC World owner Dixons Carphone has hailed “solid” festive trading against a tough retail backdrop but sales continued to fall at its embattled mobile phone division.

The firm still enjoys a relatively dominant position on the UK high street. Picture: Dixons Carphone

The group’s Carphone Warehouse business booked a 7 per cent fall in UK like-for-like sales in the 10 weeks to 5 January, which includes the crucial Christmas trading period.

Total mobile sales slumped 12 per cent in the quarter amid a continued decline in consumers opting for lengthy mobile contracts while others hold onto their handsets for longer.

Overall, like-for-like group sales were up 1 per cent. In electricals, UK and Ireland like-for-like sales were 2 per cent higher.

Chief executive Alex Baldock said: “Peak trading was solid and in line with expectations, producing record sales against a tough backdrop.

“We continued to grow our leading electrical market positions in all territories, online and instore. In UK mobile, performance was as expected. Overall, our peak trading was disciplined and well-executed, with stable gross margins.

“In UK electricals we grew sales, despite a challenging backdrop and a declining market. Sales were strong in all categories, with standout performances in TV (where we drove the supersizing trend), smart tech and gaming.”

Baldock is overseeing a revamp at the group and plans to shut more than 100 under-performing Carphone Warehouse outlets.

The company’s shares were stung in December when it detailed mammoth write-downs on the value of Carphone, alongside a £200 million cost-cutting exercise.

However, in its latest trading update, Dixons Carphone assured investors that its full-year profit guidance of about £300m remains unchanged. It also noted that international like-for-like sales grew 5 per cent in the reporting period, with Nordics up 3 per cent and Greece up 19 per cent.

John Moore, senior investment manager at Brewin Dolphin Scotland, said: “It’s a mixed set of results from Dixons Carphone – while the international business has done relatively well and online sales are growing, its UK operation is being weighed down by the mobile division.

“The well-publicised tough trading conditions in November have clearly had an impact, as has the trend towards less-frequent mobile phone upgrades which was recently highlighted by Apple in its profit warning.

“Some analysts will take solace from profit guidance remaining unchanged and the fact that Dixons Carphone has, more or less, a UK monopoly in terms of physical stores, but the company still faces a number of challenges as the high street struggles and consumer confidence continues to wane.”

Laith Khalaf, senior analyst at financial services group Hargreaves Lansdown, noted: “It’s easy to attribute Carphone’s woes to the parlous state of the UK high street, but while that’s certainly not a helpful backdrop, it’s actually dynamics in the mobile phone market which are doing the damage right now.

“Consumers aren’t switching phones as often as they used to, choosing instead to hang onto their old handsets, and take out less profitable SIM-only contracts.”