Dixons annual profits lose their spark

Currys and PC World owner Dixons Carphone has posted a slide in annual profits, with the City warning that the electricals retailer faces a tough time ahead.

The group behind Currys and PC World is undergoing a restructuring. Picture: Dixons Carphone Group
The group behind Currys and PC World is undergoing a restructuring. Picture: Dixons Carphone Group

The group unveiled underlying pre-tax profits of £382 million for the 12 months to 28 April, a fall of 24 per cent on the year before, while warning that cost pressures would hit profits once again in the year ahead.

Sales rose 4 per cent on a like-for-like basis, with total revenue coming in at £10.5 billion. In the core UK business, sales were down by 1 per cent.

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A final dividend of 7.75p was proposed, maintaining the full-year dividend at an unchanged 11.25p.

Alex Baldock, the new chief executive of Dixons Carphone, said the company had “plenty of work to do” in the wake of its recent cyber attack, which saw 5.9 million customer bank card details and 1.2 million personal data records hacked.

The group said that while 5.8 million of the payment cards targeted were protected by chip and pin, around 105,000 non-EU cards without chip and pin protection were compromised.

Baldock told investors: “It’s now a little over three weeks since our last trading statement, and just over two months since I joined.

“Recent events have underlined that we have plenty of work to do, and it will take time, but I’m even more confident than the day I took the job in our long-term prospects.

“We’re number one, maintaining or growing share in each of our markets, with people and scale multichannel capabilities no competitor can rival.

“We can make more of these strengths, by bringing clear long-term direction that sharpens our focus on our core, and that better joins up both our offer to customers and our business behind the scenes.

“There’s nothing here that can’t be done, and we expect top and bottom-line benefit of doing it. Our new leadership team is working at pace to set that direction, and we’ve taken action already to invest more in our colleagues and the customer experience, as well as to improve our performance in the UK.”

In its full-year results, the group confirmed that it expects profits for 2018-19 to be about £300m.

The firm revealed plans to close nearly 100 stores last month and warned over the expected profits hit for the new financial year as it braces for a slowdown in the UK electricals market.

Analysts at Liberum said the company was “in a period of transition”, noting: “The new chief executive has started to take action, including realigning management and planning for significant additional investment into staff and the customer proposition, which we see as sensible.”

Richard Hunter, head of markets at Interactive Investor, said: “Last month’s profit warning may have removed some of the sting, but these numbers nonetheless make for some fairly grim reading.

“There are wider concerns regarding the sector, with phone upgrades lessening, the UK consumer potentially retrenching when considering big ticket purchases, and Dixons Carphone’s reliance on customer facing staff an additional cost burden which digital direct businesses do not face.”