Mobile phones slump to drag on Dixons Carphone Christmas trading update

DIXONS CARPHONE is expected to book another sales slump at its troubled mobile phone division when it reports on its third-quarter performance this week.

City analysts forecast the retailer’s Carphone Warehouse outlets will post a five per cent decline in like-for-like sales in the period, which includes Christmas.

The Currys PC World owner’s shares were stung in December when it detailed mammoth writedowns on the value of Carphone, alongside a £200m cost-cutting exercise.

It also posted losses of £440m for the half-year to October 27 against profits of £54m a year earlier.

Nevertheless, analysts at Citi believe that should the mobile division be turned around, it could offer upside to investors.

Dan Homan, analyst at the investment bank, said: “Dixons Carphone controls over one third of the UK electricals market and despite the incessant rise of Amazon and Apple, it has gained share over the last decade as weaker incumbents have failed. We do not see a structural risk to this market share.

“The Carphone business is under more pressure but is valued at zero by the market and offers upside if trading can be turned around.”

Chief executive Alex Baldock outlined his strategy overhaul to turn around the fortunes of loss-making Carphone last month.

He said job losses were not expected as a result of the efforts, with the savings set to come from moves to merge IT systems and reduce supplier costs.

Mr Baldock added that Dixons Carphone remains committed to having stores and has no current plans to shut more than the 102 shops already announced this financial year.

Ahead of tomorrow’s trading update for the 10 weeks to January 5, the City expects comparable sales of electrical products at Dixons Carphone to have risen by just one per cent in the UK amid a challenging retail environment.