LONDON (Reuters) – Dixons Carphone, Britain’s biggest electrical goods and mobile phones retailer, reported a 22% slump in annual profit as it was hit by consumers ditching traditional handset contracts, and warned of another big decline in the current year.
Shares in the group, which trades as Currys, PC World and Carphone Warehouse in the UK, opened at a 10-year low on Thursday after it warned that profit for the current year would be nearly a third lower than the market had expected. The stock was trading down 18% at 101.9 pence at 0750 GMT.
Dixon Carphone said underlying pretax profit was expected to be around 210 million pounds in 2019-20, with growth then returning as the benefits of its turnaround plan fed through. Analysts’ consensus forecast for 2019-20 prior to Thursday’s update was about 300 million pounds.
Dixons Carphone reported an underlying pretax profit of 298 million pounds in the year to April 27. That compared to company guidance of around 300 million pounds and was down from 382 million pounds made in 2017-18.
New Chief Executive Alex Baldock launched a turnaround plan in December, focusing on the core electricals business while seeking to revitalising mobile. He also wants to bring the stores and online businesses closer together and develop the group’s credit business.
“In UK mobile, the market is changing in the way we described in December, but doing so faster. So, we’re moving faster to respond,” said Baldock.
The group has been hurt by a shift in the mobile phone market as customers keep their handsets for longer, choose cheaper SIM-only deals, and turn to more flexible credit-based offers. Its shares had fallen 37% over the last year before Thursday’s update.
Baldock is revamping its Dixons Carphone’s mobile range, including credit bundles, which it expects to have in the market this year, has renegotiated all its legacy network contracts, and is accelerating the integration of mobile and electricals into one business.
“This means taking more pain in the coming year, when mobile will make a significant loss,” he said, adding that he expects mobile to at least break even within two years.
In the UK & Ireland its mobile phone like-for-like revenue fell 4%, while its electricals revenue was up 1%.
The group also trades as Elkjøp, Elgiganten and Gigantti in Nordic countries and Kotsovolos in Greece. International like-for-like revenue was up 4%.
(Reporting by James Davey and Paul Sandle; Editing by Keith Weir)