Dixons Carphone warns on profit
Dixons Carphone has reported a 6% increase in group first quarter like-for-like sales but has warned that full year profits will be impacted by more expensive mobile phones and lower EU roaming charges.
In the 13 weeks to 29 July, like-for-likes sales in the UK rose by 4% while like-for-likes in the group’s Nordic region and Greece increased by 8% and 6% respectively.
Seb James, group chief executive of Dixons Carphone, said: “As you can see from our trading statement, we continue to trade well in all geographic markets with like-for-like sales up 6% across the group.
“It is good to see this performance from our UK electrical business particularly against the Euros football championship last year, as well as strong sales from our Nordic and Greek businesses. In all of these markets we have seen growth in revenues, market share and profitability with overall product margins remaining flat in electricals.”
James said the last few months had seen a more challenging UK postpay mobile phone market with currency fluctuations making handsets more expensive. This had led to more people holding on to their phones for longer.
He added: “To say whether important upcoming handset launches or the natural lifecycle of phones will reverse this trend, we now believe it is prudent to plan on the basis that the overall market demand will not correct itself this year.
“Over the longer term we believe that the postpay market will largely return to normal but in the meantime, we have taken a conscious decision to invest in our margin and proposition to maintain market share and scale so we remain in a strong position as the market leader when this happens.”
Dixons Carphone said changes in EU roaming legislation meant a number of one-off adjustments, particularly related to its mobile network debtor, are expected to be negative this year.
In addition, the company has recently decided to change the way in which it sells its Honeybee software product with a move towards software-as-a-service rather than upfront sales which will have an impact on this year’s profitability.
Also taking into account the disposal of its Spanish business, Dixons Carphone said it now expects the group’s headline pre-tax profit to be in the range of £360 million to £440 million.
The company expects overall profit in its core retail operations to be in line with last year.
