Dixons Carphone profits drop 24% amid hack 'n' high street struggles

CEO puts on a happy face

Dixons Carphone's annual pre-tax profits have taken a dive, falling 24 per cent to £382m.

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Its full-year results, out today, confirm that the firm has taken a beating as it struggles with customers upgrading phones less often and the demise of the high street.

Group revenue was £10.5bn, with £6.6bn of this coming from the UK and Ireland. The results show that the retailer performed better internationally than in the UK. Revenues in the Nordics and Greece went up 10 and 18 per cent respectively, while the UK and Ireland saw a 1 per cent decrease in revenues.

For the 12 months ended 28 April, the biz reported pre-tax profits of £382m – down from £500m in 2016-17.

The firm has had a rough few months, having announced plans to shutter 92 of its 650 stores amid a profit warning in May, followed by public revelations that the personal info of some 1.2 million people had been exposed in a hack.

CEO Alex Baldock, who took the reins April, admitted there was "plenty of work to do" but that "there's nothing here that can't be done, and we expect top and bottom-line benefit of doing it".

Despite the apparently gloomy situation, Baldock added: "I'm even more confident than the day I took the job in our long-term prospects."

On the earnings call, the boss emphasised that the firm planned to focus on its core business and make significant improvements to infrastructure, adding that people, process, data and technology "all needs plenty of work".

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Referring to the firm's plans to make better use of data, Baldock said he had been "reminded in the starkest possible way of the importance of securing our data" and that a review launched a couple of months ago had seen the firm treble its cyber budget year-on-year to improve security.

In response to a question from an analyst about whether the firm might face the headline-grabbing fines provided for in the General Data Protection Regulation, Baldock said he was "confident it will be treated under the pre-GDPR regime".

In UK electricals, the firm said its category mix shifted to consumer electronics and white goods – but noted that larger products increased the cost of home delivery and had less opportunity for add-on services, while Baldock said the firm was expecting the UK electrical market to continue to decline.

In mobile, the firm delivered flat like-for-like sales, noting that post-paid market conditions and contractural commitments with the networks challenged gross margins – but Baldock emphasised on the earnings call that the firm was still number one in mobile and had 22 per cent of the new handset market in the UK.

However, he acknowledged that profitability was under pressure in part due to the increase in SIM-only and SIM-free purchases – noting that a business that once made in excess of £100m EBIT was this year "barely profitable". The firm's UK mobile growth remained flat year on year.

The boss added that the firm planned to "go with the flow" of how customers were choosing to buy while offering more credit for expensive handsets – a bid to tackle the fact people are more likely to hang on to their devices for longer.

The firm retained its guidance for financial year 2018-19 of pre-tax profit of £300m. ®




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