Mobile market hit for electricals giant

Dixons Carphone has seen half year profits collapse after a difficult mobile phone market hammered the retailer.

Headline pre-tax profit for the 26 weeks to October 28 tumbled 60% to £61 million, while total sales nudged up 3% to £4.87 billion.

The high street chain was dragged down by a 3% fall in comparable sales at its troubled mobile phone division.

It pledged to reposition the arm to deliver a “simpler, less capital-intensive business”, although it gave no further details of how that would be achieved.

UK profits fell from £130m to £34m in the period.

The results come after Dixons Carphone warned in August over a Brexit profit hit as the soaring cost of new mobile phones means people are holding on to older models for longer.

The electricals giant has said the pound’s collapse following the country’s decision to quit the European Union has meant an increase in shop prices for mobile devices and bemoaned “challenging conditions”.

In revealing the results, chief executive Seb James said: “As we said in August, the UK post-pay mobile phone market is tougher, with a combination of higher handset costs and relatively incremental technology growth continuing to cause customers to hold on to their handsets for longer and some to choose a SIMO contract in the meantime.

“In addition, the later launch of the iPhone X pushed some sales into the second half of our financial year.

“Throughout the period, we made a very conscious decision to fight hard to drive sales in our product offering, and this has impacted mobile profitability.”

Profits were also hit by a £58m charge from a change in receivables revaluations and insurance contract terms.

In brighter news, the retailer said that it has had a good start to peak trading ahead of Christmas following a record Black Friday across all of its trading territories.

Dixons Carphone was buoyed by the performance of electricals, where likefor-like sales rose 7% across the group and 6% in the UK.

The firm expects full year profit to come in at between £360m to £400m.

Shares in Dixons Carphone moved higher in early trading and closed up 14.20p (8.48%) at 181.60 last night.

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