Dixons Carphone sees profits halve and warns of “weakening” spending this year

Dixons Carphone has warned that it expects a “weakening” in consumer spending later this year as it posted a surge in online sales during lockdown, but a fall in annual profits.

The retailer, which owns the Currys PC World and Carphone Warehouse brands, reported that profits in the 53 weeks to 2 May 2020 fell to £166 million from £339 million in 2018/2019, as the impact of store closures during COVID-19 and troubles in its mobile division hit earnings.

Overall UK and Ireland sales rose by one per cent to £4.54 billion, but group sales were down three per cent at £10.17 billion, mainly due to shop closures across Europe – from 24 March in the UK.

In addition, the company saw 26 per cent online sales growth in the UK and Ireland across the year, but with an impressive 166 per cent upsurge in the first few weeks of lockdown as shoppers sought out big-screen TVs, gaming equipment and smart tech as they prepared to spend more time at home. Hair clippers were also popular, with hairdressers and barbers forced to close, and sales of small domestic appliances helped drive performance, as did larger white goods across most of the year, according to the retailer’s latest financial statement.

Alex Baldock, Dixons Carphone Group Chief Executive, commented that after a positive first 10 months of the year, with market share gains and growth in Credit and Services areas, the company’s priorities changed abruptly when COVID-19 hit.

“We’ve learned a lot during this crisis,” he said. “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.

“I’m struck by the vital role that technology has played in helping millions of families through this crisis, and I’m proud of how our business has stepped up to provide that help. Where our stores have reopened we’ve performed well, while continuing to see strong online sales growth.”

Mr Baldock (pictured) continued: “That said, we expect a weakening of consumer spending later this year and are being cautious in our planning.

“Our business and strategy have so far successfully navigated a stressful period. Customers need help now as ever to discover, choose, afford and enjoy tech, for life, especially if they’re feeling the pinch of a recession. We are closely monitoring the external forecasts and are prepared for a range of economic outcomes.”

Also in its report, the retailer said its omnichannel proposition improved with online in-store sales growing by 64 per cent pre-COVID-19 and there were also improvements to its delivery capabilities, including the roll-out of intelligent routing software, allowing the retailer to fulfil the heightened volumes seen in recent months.

It also deliberately paused spend on its large UK re-platforming programme as Coronavirus began, as only 121 large UK stores were remodelled out of the planned 142 for the year. Instead, the retailer launched its ShopLive online personal shopping service in less than four weeks and it now already supports over 20,000 customer conversations each week.

In response to the pandemic, Dixons Carphone said it transformed its operations and services “almost overnight”, especially for vulnerable people and essential workers.

The retailer donated tablets to older people to help them stay connected and hundreds of laptops, headsets, chargers and phones to Age UK organisations for them to carry on their work. Similar equipment was being prioritised for all NHS Trusts and individual hospitals to help critically ill patients stay in touch with loved ones.