Dixons Carphone sales fall by almost a fifth but shares pick up

Dixons Carphone said revenue from its UK and Ireland mobile phone business fell by almost a fifth in its first half but reiterated its previous commitment to improve its performance in subsequent years.

In the six months to October 26, the group made a pre-tax loss of £86m, an improvement on the £440m loss reported for the same period last year when the group impaired the value of its UK mobile business. 

The current period’s losses included a charge of £26m to reflect lower “network receivables” — money owed by contract customers — and a provision of £30m to cover regulatory costs. The group was this year fined £29m by the UK’s financial regulator after it was found to have mis-sold insurance products in the past.

Revenue at the electricals business, which sells white goods such as washing machines along with computers, televisions and other domestic appliances, fell slightly although same-store sales were flat.

“As promised, this will be the trough year for mobile losses,” said chief executive Alex Baldock, promising the division will break even by 2022.

Mr Baldock told reporters on a conference call that the expiration of legacy contracts, which feature stiff penalties for missing volume sales targets, would expire over the course of this year and that the business would generate cost savings.

“These businesses were never really truly integrated apart from some corporate functions, and that’s what we’re doing now,” he said, referring to the 2014 merger of Dixons and Carphone Warehouse. 

He added that, while the group was not providing an update on Black Friday trading, it had not altered its full-year guidance for underlying profit of £210m. 

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The past two sets of results have been dominated by the upheaval in its UK mobile phone business as consumers move away from traditional — and higher-margin — post-pay contracts and upgrade their handsets less frequently. 

At its full-year results in June, Dixons warned that it would take “more pain” in its mobile business in the current year before moving on to more lenient contractual agreements with the UK’s network carriers in its next financial year. 

However, the recovery in its international business continues. Revenues in its Greek operation were up 8 per cent, following a 13 per cent rise in the year to the end of April.

Richard Chamberlain, analyst at RBC, said the results were broadly in line with forecasts and he expected little change to full-year estimates apart from reduced capital spending.

The shares were up more than 4.5 per cent to 138.1p in early trade, continuing a recovery that began in the summer. However, they are down two-thirds from their peak in early 2016. 

The company is awaiting the results of an Information Commissioner’s Office investigation into a data breach first revealed in June 2018, although it has already made provisions for the likely cost. 



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