Dixons Carphone is shutting 92 Carphone Warehouse stores this year as the beleaguered British mobile phone and electrical retailer continues to face “challenges” in the market.
Shares in Dixons Carphone plunged by 20% after the firm issued a warning that profits would be far lower than what analysts expected in 2018-19, at £300m.
The retailer blamed challenging market conditions, such as the decline in demand for long-term mobile contracts as well as the fact consumers are not renewing their handsets as often as before.
According to Sky News, a spokeswoman for the company said that no jobs are expected to be affected by the store closures as staff will be redeployed and offered positions at nearby larger outlets.
Alex Baldock, who replaced Seb James as Group Chief Executive earlier this year, said:
“Eight weeks in the business have cemented my optimism about Dixons Carphone’s long-term prospects.
“I’ve found exceptional strengths, and though there’s plenty to fix, it’s all fixable.”
Robust revenue, weak pre-tax profit
Dixons Carphone reported a 3% increase in revenue in the year to 16 April and a 4% rise in like-for-like sales.
UK revenue rose 2% for the year and 1% in the fourth quarter. International sales were better, with Nordics like-for-like full year revenue up 9% and sales in Greece up 11%.
Despite robust sales, pre-tax profit in its full-year results in June is expected to be £382m, down from £501m in 2017.
Company must make the most of its strengths, CEO says
“We’re number one in each of our markets, with people and capability no competitor can match,” Mr. Baldock added.
He said that the company has an opportunity in making the most of its strengths, which it is currently “nowhere near doing”.
“And we must: nobody is happy with our performance today,” Mr. Baldock said.
“We’re getting on with it, through a new leadership team and structure that’s promoted top talent, cleared away unnecessary layers and silos, and started to speed up decision-making.
“We won’t tolerate our current performance in mobile, or as a Group. We know we can do a lot better. I’ve been struck since my first day by the commitment and know-how of so many of my colleagues, by the breadth and depth of our multichannel capability, by the sheer energy we can release here.
“Equally I’ve been struck by the strength of our market position, of our appeal to customers. There’s so much more to come from Dixons Carphone, though plenty of hard work lies ahead. I look forward to giving you more of my initial thoughts at our full year results in June, and a fuller update on our plans and progress in December.”