Close to 3,000 jobs axed at retail giant
● All 531 Carphone Warehouse stores to close in overhaul of mobile offering
Dixons Carphone has revealed plans to shut all 531 of its standalone Carphone Warehouse mobile phone stores in the UK, with a net loss of almost 3,000 jobs.
The retail heavyweight said the outlets – which make up around 8 per cent of the entire group’s selling space – will shut on 3 April as it plans to sell mobile phones solely in 305 of its larger combined Currys PC World stores and online.
Dixons Carphone said that almost 40 per cent of affected staff, around 1,800 people, will be able to take new roles elsewhere in the business, but it expects to make 2,900 redundancies.
In a stock market update the company described the plans as an “essential next step” in the turnaround of its British mobile arm, which is set to make a £90 million loss this year.
The group’s 70 Carphone Warehouse stores in Ireland will remain open and its international operations are unaffected.
Carphone Warehouse group chief executive Alex Baldock said: “There’s never an easy time for an announcement like this, but the turbulent times ahead only underline the importance of acting now.”
He added: “We’re working hard to look after those colleagues we can’t find new roles for, financially and otherwise.
“We’ll pay enhanced redundancy, any bonuses, honour their share awards, and help them find new jobs through an outplacement programme.”
Dixons Carphone said the cash costs of the restructure will come in at around £220m, with its mobile division forecast to break even by the financial year 2021/22.
Dixons Carphone said it had not yet seen a large hit from the coronavirus crisis across its core chain apart from supply issues, but is “preparing for one”.
However, its 29 travel stores have been badly affected by the outbreak as passenger numbers plummet, and it is expecting profits from the division to be knocked by around £5m.
It also warned of an impact from the Greek government’s decision to close shops for two weeks from 18 March.
However, it said both the travel and Greek businesses are small parts of the overall group and stuck by its full-year profits guidance.
The group expects total adjusted pre-tax profits for the current year to be around £210m.
The firm said it had also seen a “notable” rise in demand for fridges and freezers, small domestic appliances and laptops as people prepare for home working and potential self-isolation.
Dixons Carphone said: “We are aware that our stores could experienceasignificantreduction in sales in the months ahead and we are modelling a range of downside scenarios and planning accordingly.
“We are ready to switch more fulfilment to our online and direct channels and we will manage our costs and cash closely, including a tight control of capital expenditure if necessary.”
The group had a mixed Christmas, with its electricals division holding up well in difficult conditions but its mobile phone business continuing to suffer. Bosses revealed that sales in its electricals division, which includes Currys PC World, were up 2 per cent on a like-for-like basis over the ten weeks to 4 January.
“We’ll pay enhanced redundancy, any bonuses, honour their share awards, and help them find new jobs”
CEO ALEX BALDOCK