Lockdown website ‘frenzy’ expected to have slowed at Dixons

Investors will already have a good idea of what to expect at the top of Dixons Carphone’s balance sheet next week as the business reports its results for the 12 months to the start of May.

Despite early predictions before lockdown that the company would endure a “significant reduction” in sales, the figures showed otherwise.

The last time Dixons updated shareholders on its finances, it said sales had only dropped by 3% in the five weeks to April 25.

It means investors already more or less know what revenue to expect in next week’s results, which only take into account an extra week so eyes will be elsewhere.

“On Wednesday our focus will be on the outlook statement,” Sophie Lund-yates, an analyst at Hargreaves Lansdown, said.

She worries the 166% growth the company had online in the UK and Ireland in the weeks following lockdown might have slowed down.

Demand for laptops and other equipment staff needed to work from home surged as offices emptied out. People also turned to hair clippers as barbers closed across the country.

“We’re concerned the initial website frenzy as people stocked up on extra freezers and homeworking equipment may have simply taken future sales,” Ms Lund-yates said.

“We’re interested to know how trading’s looked in the first few weeks of the new financial year and when – or indeed if – Dixons thinks trading will return to normal.”

Analysts are expecting pre-tax profit to hit £151 million over the financial year, less than half last year’s £339m.

They also forecast a 3.4% drop in revenue to just over £10 billion, according to an average compiled by the company.

Ms Lund-yates added: “Operating margins will be something to watch, too. These are already thin at around 3%, largely because of stiff price competition in the sector. We think online sales are likely lower margin, too, so the increased popularity of the website could mean margins have shrunk.”