Belfast Telegraph

Dixons Carphone in good shape to ride out Brexit-induced slowdown

The boss of Dixons Carphone said the retailer is primed to ride out a Brexit-induced economic slowdown and has backed UK shoppers to keep spending with credit while borrowing is cheap.

Chief executive Sebastian James said the move to cut stores and bring more of its brands under one roof had reduced costs without harming sales, giving the firm greater financial breathing space should consumer spending fall once Article 50 is triggered.

It came as Mr James shrugged off the Bank of England's concerns over soaring household debt as the public continues to borrow heavily in the face of a financial squeeze from rising inflation.

Speaking at the Curry's & PC World megastore in Wednesbury near Birmingham, he said shoppers were borrowing with a level head and rising credit may reflect the growing consumer appetite for accessing products without owning them.

"I think the consumer is behaving rationally," Mr James told the Press Association.

"You can enjoy things now because you can afford them and they are not costing very much to get, relative to the old days where you were paying a higher level of interest.

"As individuals we need to think about our personal debt, but also I think it is evidence of a changing thought about ownership.

"I think it is quite possible that customers are buying things that they could afford, but they take the credit because it's cheap and they want the usage model. You see it with Air BnB and Uber - people don't want a car, they just want to use a car."

Mr James, who wanted Britain to remain in the European Union, admitted he thought electrical sales would take a hit from Brexit vote, but he has seen no signs of an impact.

The electrical and mobile phones giant notched up its fifth year in a row of Christmas sales growth on Tuesday, with like-for-like sales across stores in UK and Ireland rising 6% in the 10 weeks to January 7.

However, economists have warned that sterling's slump against the US dollar since the EU Referendum will make the cost of living soar, squeezing household spending power.

On the threat to sales, Mr James added: "We have configured our business in case there is a problem to be able to adapt to it, but we have also not held back on investment.

"When I joined nine years ago, we had 17% market share and falling and now we have 25% and growing, so that is a big gap."

An example of how the retailer has strengthened its financial foundations can be seen at the Wednesbury site, where it once had separate PC World and Curry's megastores before bringing them - alongside Carphone Warehouse - into one unit.

"We used to have on this park 140,000 sq ft of retail space. We are now running 68,000 sq ft in this store. That costs half as much. We are channelling the same sales through half the fixed cost. That is obviously massively more flexible."

While nearly all of Dixons products are imported, he said the firm should be able to offset the rising manufacturing costs from the Brexit-hit pound.

The retailer's vast range of goods and the deflationary pressure on some electrical items - like televisions - would keep prices manageable, he added.

Home delivery will be a key "battle ground" for the retailer in 2017, the Dixons' boss said, as he confirmed plans to launch a same-day service this year.

Mr James said Dixons was going toe-to-toe with Amazon when it came to online growth and held a 25% share of the electricals market compared to the US retail giant's 8%.