Published on August 24th, 2017 | by The GC Team0
Dixons Carphone warns on profit as mobile sales slow
Shares in Dixons Carphone fell by more than a third this morning after the retailer said its profits for 2017/18 would be in the region of £360m to £440m, down from £501m last year.
While the company reported a good performance in electricals in the UK & Ireland, Nordics and Greece, it said it was facing “challenging” conditions in the UK mobile phone market.
Seb James, Group Chief Executive, said: “Currency fluctuations have meant that handsets have become more expensive whilst technical innovation has been more incremental. As a consequence, we have seen an increased number of people hold on to their phones for longer, and while it is too early to say whether important upcoming handset launches or the natural lifecycle of phones will reverse this trend, we now believe it is prudent to plan on the basis that the overall market demand will not correct itself this year.”
The company also predicted it would be hit by the scrapping of EU roaming charges for those using their phones abroad, estimating the net negative effect will be in a range between £10m and £40m.
In a trading statement for the 13 weeks ended 29th July, the retailer said it continues to trade well in all geographic markets, with like-for-like sales up 6% across the Group.
“It is good to see this performance from our UK electrical business, particularly against the Euros football championship last year, as well as strong sales from our Nordic and Greek businesses,” said Seb James.
“In all of these markets we have seen growth in revenues, market share and profitability with overall product margins remaining flat in electricals.”