‘Plenty of work to do’ as Dixons Carphone profits plummet 24%

Despite a strong full-year performance in Dixons Carphone’s international businesses, with group revenues up three per cent, pre-tax profits plummeted by around a quarter.

Revenue for the 2017/18 financial year was £10.53 billion compared with £10.24 the year before, but pre-tax profits nosedived from £500 million in 216/17 to £382m this year – a drop of around 24 per cent.

The group blamed flat mobile phone sales for the disappointing profit figures, although electricals generally showed a like-for-like sales increase of three per cent. This followed hot on the heels of its decision to close 92 stores and news of another massive data breach. The last one cost the group a fine of £400,000.

In the UK, sales fell from £6.74bn last year to £6.65bn (down one per cent), but overall sales revenues were rescued by the Nordics – up 10 per cent to £3.47bn – and Greece, where sales soared 18 per cent to £410m.

Commenting on the results, group chief executive Alex Baldock said: “It’s now a little over three weeks since our last trading statement, and just over two months since I joined. I’m delighted to be at Dixons Carphone, in a business with so many strengths, and with so much more to go for.”

But, he added: “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. We’re number one, maintaining or growing share in each of our markets, with people and scale multichannel capabilities no competitor can rival.

“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.

“Our new leadership team is working at pace to set that direction, and we’ve taken action already to invest more in our colleagues and the customer experience, as well as to improve our performance in the UK.”

Looking more closely at the UK, the group said that with the computer market softening, its product mix had shifted towards consumer electronics. In the phones market, its said that post-pay market conditions and its contractual commitments with networks meant that gross margins continued to be challenged.

Looking ahead to 2018/19, it said it expected international businesses to reinforce its market leadership. It added it expected a contraction in the UK electricals market but that it planned to “use scale to maintain our market share”. It predicted a group pre-tax profit of £300m for 2018/19.