Annual profits at Dixons Carphone fell from £500 million to £382 million thanks to narrowing margins and unfavourable market conditions.
The electric retailer, which is also the market leader in mobile phone sales, had already issued two profit warnings and plans to shut 92 of its 700 stores later this year. It also said it expects profits to fall again in the upcoming 12 months, issuing guidance for around £300 million.
Group Revenue increased by four per cent across all markets and two per cent in the UK. But changing consumer behaviour, such as a less frequent upgrade cycle and the increased popularity of SIM Only tariffs and SIM-free handsets, contributed to a squeezing of margins and flat sales in its mobile division. Meanwhile the electricals market has its own challenges.
Dixons Carphone profit
CEO Alex Baldock has only been in the job since April, but has already indicated his desire to overhaul the company with the increased use of data analytics, new technologies and better marketing, as well as renegotiating contracts with the mobile operators.
“I’m delighted to be at Dixons Carphone, in a business with so many strengths, and with so much more to go for. Recent events have underlined that we have plenty of work to do, and it will take time, but I’m even more confident than the day I took the job in our long-term prospects,” he said.
“We can make more of these strengths, by bringing clear long-term direction that sharpens our focus on our core, and that better joins up both our offer to customers and our business behind the scenes. There’s nothing here that can’t be done, and we expect top and bottom-line benefit of doing it.”
The company has also been the victim of a major data breach in recent weeks, with the details of as many as six million credit and debit cards affected. The breach took place in July 2017 and both the police and ICO have been notified.
Carphone Warehouse is the only major retailer where consumers can sign up for services of all four major mobile operators following the collapse of Phones4U in 2014.