Dixons Carphone lowers top end of profit forecasts amid weak UK sales growth
The company struggled from weak growth in its UK and Ireland division where like-for-like revenues rose just 3%.
Dixons Carphone has narrowed its profit forecasts after the company detailed weak Christmas trading at its UK and Ireland division as it continues to come up against more cautious consumer spending.
The company reported a 6% rise in like-for-like group revenues for the 10 weeks to January 6, propped up by double digit like-for-like growth in its Nordic and Greek division, up 11% and 23%, respectively.
It struggled from a weaker rise in sales in its UK and Ireland division where like-for-like revenues rose just 3%.
Chief executive Seb James – who the company revealed late on Friday was leaving to work for Boots – said he was “satisfied” with the regional performance given the “more cautious consumer environment”.
“In UK&I electricals, our Boxing Day sales did not quite mirror the promise of our very strong Black Friday week, but we are very confident that we grew market share in pretty much every category,” he said.
He detailed a “strong sales period” for the UK mobile business thanks in part to better availability of the iPhone X, but said current market conditions meant that “gross margins continue to be challenged in phone”.
Along with greater market share growth in SIM-free handsets and SIM-only offerings, its UK and Ireland mobile sales grew around 8% over the Christmas trading period.
Dixons Carphone went on to lower the top end of its pre-tax profit forecasts on Monday to a range of £365 million and £385 million, from previous estimates of between £360 million and £400 million.
The group warned last month that it may look to shut stores after being hit by a 3% fall in half-year sales at the troubled mobile division, which contributed to a 60% plunge in half-year profits.
It also parachuted deputy chief executive – and former Carphone Warehouse boss – Andrew Harrison into the unit as chairman just before Christmas as part of efforts to arrest falling sales.
However, Mr James said there were some bright spots ahead.
“Looking forward we continue to keep our antennae twitching for any material change in consumer behaviour, but remain relentless in our focus on providing the best value, choice, and service to our consumers.
Thank you again to all my colleagues across the Group for your stupendous work over our Peak period. Lots of great performances, and special mentions have to go to our Greek and Nordic teams. Amazing results.— Sebastian James (@BootsSebJ) January 22, 2018
“For the remainder of this year we have an early Easter, a new Samsung phone and the first week or two of our World Cup promotion to look forward to, and work continues on redefining and refocusing our Carphone Warehouse business to be a simpler, less capital-intensive model.”
Investors were relatively upbeat, sending shares up around 1.3% or 2.55p to 190.5p in morning trading.
It will be Mr James’ last Christmas trading update for Dixons Carphone, with the chief executive set to be replaced by Alex Baldock at the end of the financial year in April.
Mr Baldock is currently group chief executive of Shop Direct, the UK’s second largest pure-play online retailer, a position which he has held since 2012.