Mobile sales at Dixons Carphone fell by a fifth over the past 12 months as the impact of the coronavirus offset efforts to spark a revival at the business.
Prior to lockdown, the company’s mobile division was on track to lose £90 million, leading to the planned closure of 531 standalone Carphone Warehouse locations.
However lockdown restrictions meant that these ‘3-in-1’ stores also had to close their doors. While demand for items such as televisions, fridges and freezers saw online electrical orders rise by 22 per cent (including a 144 per cent rise in April alone), the transfer of mobile sales to online was far lower.
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Mobile revenues fell to £1.6 billion, contributing to a loss of £104 million within the division. Meanwhile, UK & Ireland electrical sales rose by 1 per cent to £4.6 billion, with group revenues declining by 3 per cent to £10.2 billion. Net profits fell from £339 million to £166 million.
Dixons Carphone the UK’s latest mobile phone retailer but has struggled to cope with changing consumer habits. A saturated market and longer refresh cycles are lowering contract renewal rates, making SIM-Only tariffs and SIM-free handsets more popular, squeezing margins.
CEO Alex Baldock has put an omnichannel strategy at the heart of his transformation programme and the company did report that online in-store sales had risen by 64 per cent when compared to the pre-lockdown period. Additionally, there was growth in credit services and additional protection products.
The company added that the closure of standalone Carphone Warehouse stores was a significant step forward to the elimination of losses within its mobile unit. Dixons said at the time that the smaller outlets could not meet the changing demand of consumers who would be better served by its larger stores and online platforms.
Baldock said that the firm was on track to meet its financial expectations but warned investors of the macroeconomic challenges ahead.
“The first ten months of the year was a story of delivering on our promises and accelerating the transformation of Dixons Carphone,” he said.
“Where our stores have reopened we’ve performed well, while continuing to see strong online sales growth. That said, we expect a weakening of consumer spending later this year and are being cautious in our planning.
“We’ve learned a lot during this crisis and will emerge a better business from it. We’ve pioneered new ways of shopping, empowered our colleagues to move faster, and seen how technology is set to play an ever-bigger role in everyone’s lives. We’re also more convinced than ever that Dixons Carphone has the right strategy for our customers, our colleagues and our shareholders in the years ahead.”
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