Dixons Carphone has posted a £440 million loss for the first half of its financial year, but claims the results are “as expected” and that its transformation strategy will return the business to growth.
The company’s underlying sales actually rose by one per cent to £4.89 billion but other factors conspired to result in the loss, which is a dramatic turnaround from the £54 million pre-tax profit it recorded this time last year.
It has been a difficult 2018 for the retailer. It started with the departure of CEO Sebastian James and CFO Humphrey Singer following a troubled 2017 in which profits fell considerably and continued with store closures and a significant data breach that saw millions of personal data records and payment cards affected.
Dixons Carphone results
A lot of its woes can be attributed to changing consumer habits. Carphone Warehouse is the UK’s biggest mobile phone retailer, but the market is saturating, and people are buying fewer phones. SIM-Only tariffs and SIM-free handsets are becoming increasingly popular and this is having an effect. Margins are being squeezed and sales are flat.
Current CEO Alex Baldock expressed a desire to “reset” Dixons Carphone’s relationship with operators so they are more sustainable and believes that combined with plans to improve its technology, train staff and offer credit services, the firm can revitalise its mobile business and drive online sales.
In addition, Dixons Carphone says it has identified £200 million worth of cost savings that can be achieved through efficiency measures, while 30,000 staff will become shareholders in the business through new share awards.
“We believe that Dixons Carphone is now on the path to sustainable success,” said Baldock. “We have set a clear long-term direction that will deliver more engaged colleagues, more satisfied customers and a more valuable business for shareholders.
“We have powerful strengths, as a growing market leader with amazing people and capabilities no competitor can match. Our plan builds on those strengths. We’re focusing on our core, and on four things that matter most: two big profitable growth opportunities in online and credit; revitalising our mobile business; and giving customers an easy experience.
“We’ll deliver these through capable and committed colleagues, working in one joined-up business, with strong infrastructure.”
Dixons Carphone’s plan to renegotiate deals with mobile operators could be a challenging obstacle to overcome, however. Reports over the past few months have suggested that Vodafone, O2 and EE are unwilling to offer more favourable terms at a time when they are all heavily investing in their own retail presences. Three withdrew from the retailer in 2013.
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