News | Published June 20 2019

Shares in Dixons Carphone down amid mobile market turbulence

Shares in Dixons Carphone have fallen after the group reported a £259 million loss in the year ending April 27.

The group's mobile phone business, Carphone Warehouse, is also set to make further losses over this year.

The figures are in stark contrast to the pre-tax profit of £289 million that it declared the previous year.

Company shares were down 12 per cent in early afternoon trading on Wednesday, having meandered over the course of the morning.

Previously, the value of Carphone Warehouse came down in December 2018 amid reduced demand for mobile contracts and lower numbers of people renewing their handsets.

The mobile arm’s loss in value was of significant cost to the group through one-off charges, totalling £557 million.

This saw revenue across the Dixons Carphone group hit with a one per cent fall as a result.

Carphone Warehouse responded by earmarking 92 of its 700 stores for closure in 2018.

Dixons Carphone chief executive Alex Baldock pointed the finger at "changes" in the UK mobile market coming "faster" than expected, leading to a ‘a deterioration in the forecast performance of the UK and Irish mobile business’.

“We’re moving faster to respond [to the changes in the market]”, Baldock said.

He also revealed that the business had been working on a new “customer offer” and had begun focusing on combining its mobile and electrical goods arms.

Its legacy network contracts with mobile operators have also been renegotiated.

Baldock added: “This will mean taking more pain in the coming year, when mobile will make a significant loss.

We expect mobile will at least break even within two years, and beyond that, equipped with a stronger and unconstrained offer, we will of course aim to do better”.

The group’s electrical goods arm has grown in shares worldwide and is expected to yield an increase in sales and be the leader in profit generation for the business.

With consumer tendency now being to purchase handsets and contracts online or via mobile operators directly, phone shops may be the latest business model forced to change to keep up with the market.

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Authored by

Scott Challinor
Business Editor
June 20 2019

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