Dixons Carphone reports huge overall losses; electricals remains flat

Despite overall full-year losses, UK and Ireland electricals revenue for Dixons Carphone increased – by just one per cent (to £4,475 million) – with full year like-for-like revenue growth of also one per cent, for the 12 months to 27 April 2019.

According to the retail giant’s latest financial results, overall market share in electricals increased, driven mostly by large screen TVs, small white goods and smart home products. The online side of the business continued to grow strongly with revenue growth of nine per cent and, increasingly, customers took advantage of the ability to order online and collect in store, the company reported.

Also for the electricals side of the business, headline earnings before interest and tax (EBIT) decreased by £51 million to £180 million. Within the first half of the year, the company announced that gross margins were down due to “changes in channel mix which drove higher demand for delivery and installation”; it also accounted for lower services adoption rates as it reconfigured its service proposition.

Online

Dixons Carphone reported of “good early progress”, with online growth in UK and Ireland electricals up nine per cent, accounting for 28 per cent of sales.

The online product range was increased by 5,000 products this year and the retailer made improvements in the online customer experience, focusing on smartphone usage and it is also planning to launch a transactional app in its next financial year.

“We’re making more of online and stores working together at scale,” the company said. “Stores have to be exciting for customers to discover the right tech for them. This includes face-to-face advice, demos so customers can experience the tech for themselves and giving more space in stores to growth categories such as gaming, large screen TVs and home tech.”

It also reported on the roll-out of in-store tablets (currently 5,500 tablets in stores across the UK and Ireland) for consumers to use to shop and these will become transactional later this year.

For the overall business, shares plunged after it reported a full-year loss and said its mobile phone arm would make a “significant loss” this year. The retailer lost £259 million in the year to 27 April, compared with a pre-tax profit of £289 million last year.

Elsewhere, Group headline revenue decreased by one per cent in Sterling terms to £10,433 million and headline EBIT decreased by £78 million to £322 million.

A much more valuable business

Alex Baldock, Dixons Carphone Group Chief Executive, commented: “The past year has seen us keep our promises to investors, delivering around £300 million of headline profit, resilient free cash flow, and continued growth in sales and market share in UK & Ireland electricals and International. And we’ve taken the first big strides in our transformation.

“But we know we have it in us to be a much more valuable business. That will take time. In December, we set out a clear strategy to help everyone enjoy amazing technology, and early progress is promising.

“Early steps towards an easier customer experience have seen satisfaction scores start to rise. And we’ve laid important foundations for Services to make our customer relationships stickier and more valuable.”