Investors bullish even as tough conditions dent Dixons Carphone
The tough retail conditions on Britain’s high streets means difficult times lie ahead for Dixons Carphone, with significant losses in its UK and Ireland business, but experts have said the business is on track for a turnaround.
The phone and electronics retailer said it expects to lose £90 million in the UK and Ireland this year, in line with previous guidance.
Meanwhile, the results showed that, whereas pre-tax losses were slashed from £440 million to £86 million, when stripping out the effects of new reporting standards, profit more than halved, to £24 million from £60 million.
Revenue dipped 4% to £4.7 billion. On a like-for-like basis it was down 1%.
But analysts and investors reacted well to what on the face of it could have been poor results.
Shares were trading up 1.4% at 133.8p shortly after markets opened on Thursday.
John Moore, senior investment manager at Brewin Dolphin, said: “While it might be tempting to see Dixons Carphone’s loss as the headline-grabber from these results, it doesn’t tell the full story.”
He said investors will be unsurprised by the results, after management put out signals earlier this year.
And those watching the business will take heart in online growth – up 11% in electrical, cost savings and customer satisfaction.
Mr Moore said: “There is undoubtedly a tough period ahead for Dixons Carphone, and an increasingly difficult retail environment will be of little help – but it seems that the company will be a survivor where others may not.”
However, the mobile business is dragging down the group, as is the UK and Ireland, where it expects to make significant losses this year before hopefully bouncing back.
The 2021 financial period is expected to be the “trough year”, the firm said, before hopefully breaking even in its mobile wing in 2022.
“We’re on track to deliver what we promised this year, and with our longer-term transformation,” said chief executive Alex Baldock.
“In a tough UK electricals market, we’ve gained significant share, and strengthened our market leadership.”
He added: “Good progress, yes, but all of us at Dixons Carphone are shareholders, and conscious that our business is still nowhere near its full potential.
“We’re determined to realise that potential, and confident we’re on the right path to do so.”