Reaction: Dixons Carphone a 'survivor' amid torrid time on high street

The tough retail conditions on Britain’s high streets means difficult times lie ahead for Dixons Carphone, with significant losses in its UK and Ireland business, but experts have said the business is on track for a turnaround.
The retailer is best known for the Currys and PC World brands in the UK. Picture: Dixons CarphoneThe retailer is best known for the Currys and PC World brands in the UK. Picture: Dixons Carphone
The retailer is best known for the Currys and PC World brands in the UK. Picture: Dixons Carphone

The mobile phone and electronics retailer said it expects to lose £90 million in the UK and Ireland this year, in line with previous guidance.

Meanwhile, the latest results showed that, whereas pre-tax losses were slashed from £440m to £86m, when stripping out the effects of new reporting standards, profit more than halved, to £24m from £60m.

Hide Ad
Hide Ad

Revenue dipped 4 per cent to £4.7 billion. On a like-for-like basis it was down 1 per cent.

The mobile business has been dragging down the group. Picture: Dixons CarphoneThe mobile business has been dragging down the group. Picture: Dixons Carphone
The mobile business has been dragging down the group. Picture: Dixons Carphone

Alex Baldock, group chief executive of the Currys and PC World owner, said: “We’re on track to deliver what we promised this year, and with our longer-term transformation.

“In a tough UK electricals market, we’ve gained significant share, and strengthened our market leadership. Our planned investments in the colleague and customer experience have played a big part in this resilient performance, demonstrated by sharply increased customer satisfaction scores.

“Our big international business also registered market share gains in every territory, with solid sales and margin improvements.”

Analysts and investors reacted well to what on the face of it could have been poor results.

John Moore, senior investment manager at Brewin Dolphin, said: “While it might be tempting to see Dixons Carphone’s loss as the headline-grabber from these results, it doesn’t tell the full story.”

Signals

He said investors will be unsurprised by the results, after management put out signals earlier this year.

And those watching the business will take heart in online growth – up 11 per cent in electrical cost savings and customer satisfaction.

Hide Ad
Hide Ad

Moore said: “There is undoubtedly a tough period ahead for Dixons Carphone, and an increasingly difficult retail environment will be of little help – but it seems that the company will be a survivor where others may not.”

Richard Lim, chief executive at Retail Economics, noted: “Leveraging the valuable store network and seamlessly integrated it with their online and services proposition will be a key differentiating factor in their strategy to return to growth.

“But the strategy is one thing, the clock is ticking for it to be effectively executed,” he added.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Retailers today have to be increasingly creative to keep tills chiming. That’s behind Dixons’ drive to offer an experience not just a shop. Store remodelling is giving more space to so called experience zones, where customers can interact with the latest technologies.

"The group’s flexing some different muscles to keep customers coming through the doors, by creating a space where potential buyers can play with items and have face-to-face interactions with product specialists. The human touch is something its online rivals can’t match, making it important."

However, the mobile business is dragging down the group, as is the UK and Ireland, where it expects to make significant losses this year before hopefully bouncing back.

The 2021 financial period is expected to be the “trough year”, the firm said, before hopefully breaking even in its mobile wing in 2022.

Baldock told investors: “Mobile is challenging as expected. As promised, this will be the trough year for mobile losses, and it will be break-even by 2022. Good progress, yes, but all of us at Dixons Carphone are shareholders, and conscious that our business is still nowhere near its full potential. We’re determined to realise that potential, and confident we’re on the right path to do so.”

Related topics: