Published on March 26th, 2020 | by The GC Team0
Dixons Carphone reports strong uplift in sales but full-year profitability under threat due to COVID-19
Dixons Carphone today reported a like-for-like group rise of 8% in electricals in the 11 weeks from 5 January to 21 March, including a strong uplift of 23% in the last three weeks due to a rise in online trading as the spread of COVID-19 brought about an unprecedented rise in the number of people working from home.
In line with Government guidance, the company closed its stores across the UK and Ireland from 24 March, a move which followed store closures in Greece from 18 March.
At present almost all stores in the Nordics continue to trade, the business confirmed, adding that online trading has been very strong in all countries over the last two weeks as people prepared to work from home with the need for essential technology to continue their lives during the outbreak.
Early signs are that this strong trading has continued since stores closed and will help to compensate for lost store sales.
Dixons Carphone said the stores that are now closed were expected to contribute sales of c.£400m for the rest of the year, and while there will be some recovery through online operations the overall loss of sales will adversely impact full-year profitability and cash position, therefore it will not achieve the previous guidance for current year adjusted PBT of £210m or for net debt to be lower year-on-year.
On 17th March, Dixons Carphone announced it is to close all 531 of its Carphone Warehouse standalone stores on 3 April, putting some 2,900 jobs in jeopardy. The company said the move was not related to the coronavirus outbreak, but “because of the changing mobile market.”
The announcement will have come as no surprise to those who have been following events since the merger of Carphone Warehouse into the Dixons Retail business in 2014. The standalone mobile outlets struggled from the start to bring a somewhat outdated retail model into line with changing consumer demands. With losses from this part of the business becoming “unsustainable”, Dixons has finally reshaped its mobile offering for a 21st century market.