Dixons Carphone’s online sales surge, despite mobile revenue plunge
UK electrical retailer Dixons Carphone has reported a 10% fall in mobile phone sales in the first quarter, however, this was offset by a 14% rise in online sales.
The FTSE 250-listed company also maintained its guidance for the full year.
Overall, UK & Ireland electricals like-for-like sales grew by 2%, with a strong performance in white goods, tablets and gaming. This, the company said, was offset by small declines in large screen TVs against World Cup comparatives.
Mobile sales plunge
The London-listed company also said that revenue from the sale of mobile phones fell by 10%, however the company insisted this was in line with its forecasts in what it said continues to be a challenging traditional postpay market.
Dixons Carphone, which also owns Currys/PC World, said that online sales in electrical grew by 14% and that it was on track to grow its UK range by 5,000 units this year.
"We're on track with both our trading this year and our longer-term transformation”, said Alex Baldock, Group Chief Executive.
“In Electricals we continued to grow and win market share in all territories and customer satisfaction further improved.
“The Mobile market is as challenging as expected, underlining the need for the decisive actions that we set out in June.
“We remain committed to growing Electricals sales and headline profits in UK & Ireland and International this year, and to this being the trough year for Mobile losses.
Our longer-term transformation is also on track. We made further gains in our big priorities of Online, Credit and Services to help our customers choose, afford and enjoy amazing technology.
“Over time these will drive increasing benefits for our customers and help make us a much more sustainably valuable business.
Commenting on the UK’s delayed departure from the European Union, Baldock added: ‘The current political and economic climate is volatile but, assuming no material disruption from that, we stand by our full year guidance, as we do our longer-term commitments on EBIT margin and cashflow.”
Some City experts believed the results, though, showed the company was at the mercy of slowing consumer change habits.
Changing consumer habits
"Dixons Carphone has posted an especially deep fall in mobile revenue, indicating that it's still smarting from an increasing tendency for people to hold onto the same phone for longer," said Fiona Cincotta, senior market analyst at CityIndex.
"The stronger electronics division has offset the blow from the weakness in mobile, allowing Dixons to stick to its headline profit guidance for the year. But the company remains in a difficult place, with a big question mark still hanging over the sustainability of its dividend.
"It's still early days in Alex Baldock's turnaround effort so it's hard to predict whether he'll garner much success, especially for a company that has disappointed investors with so many downgrades to date.
"Baldock will be hoping the gradual introduction of 5G capabilities, which the big UK carriers are launching this year and rolling out more fully in 2020, will inspire some folk to upgrade their phones. There's no certainty that they will, especially if consumer confidence remains buffeted by Brexit uncertainty."
Dixons Carphone’s shares surged 7.5% to £1.15 in London on Thursday morning.
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