£556m hit for Dixons as its profits slide
ALMOST £556m was wiped off the value of dixons Carphone after its new boss issued a stark profit warning and laid out his blueprint to overhaul the business.
Investors were rattled as chief executive Alex baldock, ( pictured), who joined eight weeks ago, said ‘nobody was happy’ with performance.
Announcing plans to close one in ten stores, the 47-yearold launched a blistering attack on the previous management team.
The grim update sent shares down as much as 24pc in early trading. They closed down 20.7pc, or 48.4p, at 185p.
The drop meant cofounder and former chairman of Carphone Warehouse Sir Charles dunstone saw the value of his 11pc stake dive by £61m to £235m.
dunstone’s former business partner david Ross, 52, who has a 5pc stake, lost £27m. dixons Carphone owns PC World, mobile phone retailer Carphone Warehouse and electronics chain dixons. It also has companies in Scandinavia, Greece and Spain. The company is now expecting to report full-year profits of £382m next month, down from £501m a year earlier. It pencilled in a further drop in profits in the current financial year to £300m. baldock, who took over from david Cameron’s close pal Seb James last month, made a swipe at former management as he laid bare the issues facing the business. He said: ‘We’re number one in each of our markets, with people and capability no competitor can match. ‘Our opportunity lies in making the most of those strengths, which we are nowhere near doing. And we must: nobody is happy with our performance.
‘We won’t tolerate our current performance in mobile, or as a group. We know we can do a lot better.’
but baldock added: ‘ I’ve found exceptional strengths, and though there’s plenty to fix, it’s all fixable.’ While sales are growing, dixons has struggled to translate this into rising profits. Sales edged up 1pc in UK and Ireland in the last three months of the financial year, compared to 8pc in the Nordics and 10pc in Greece.
dixons Carphone’s mobile business has stalled with customers unable to afford expensive handsets and hanging on to their old phone for longer. Apple’s latest iPhone costs £1,000. The group has more than 1,000 stores in the UK, with around 70pc of these Carphone Warehouse shops. It will close 92 standalone Carphone stores this year.
Ex-Shop direct chief baldock joined after James, 52, left to run pharmacist boots. Finance director Humphrey Singer, 51, also stepped down to go to Marks & Spencer.
Since joining, baldock has scrapped unwanted management layers by getting rid of separate UK and Ireland management teams and replacing them with a single, executive committee.