Profit forecast cut as Dixons Carphone sees margins drop

● New CEO named as retail giant flags healthy Christmas

Electricals retailer Dixons Carphone yesterday blamed pressure on margins as it cut its top-end profit forecast despite healthy Christmas trading figures.

The company also named Alex Baldock as its new chief executive after revealing last week that current incumbent Seb James was leaving to work for Boots.

Dixons Carphone reported a 6 per cent rise in like-forlike group revenues for the 10 weeks to 6 January, propped up by double digit like-for-like growth in its Nordic and Greek division, up 11 per cent and 23 per cent respectively.

But its UK and Ireland division struggled from a weaker rise in sales with like-for-like revenues up just 3 per cent blamed on caution among consumers.

James said he was “satisfied” with the performance given the “more cautious consumer environment”.

“In UK&I electricals, our Boxing Day sales did not quite mirror the promise of our very strong Black Friday week, but we are very confident that we grew market share in pretty much every category,” he said.

James detailed a “strong sales period” for the UK mobile business thanks in part to better availability of the iphone X, but said current market conditions meant that “gross margins continue to be challenged”.

Along with greater market share growth in sim-free handsets and sim-only offerings, its UK and Ireland mobile sales grew around 8 per cent over the Christmas trading period.

But it has lowered the top end of its pre-tax profit forecasts to a range of between £365 million and £385m, down from previous estimates of between £360m and £400m.

James said bright spots ahead for the firm included the launch of a new Samsung phone and World Cup promotionial activity.

Analyst Nicholas Hyett of Hargreaves Lansdown said the firm had delivered “very impressive” top line performance over Christmas but said there still challenges ahead for the group.

“The all-important mobile market is changing rapidly and while initial signs are good, with strong growth in sim-free handset sales, margins are still struggling,” he said.

Incoming chief executive Baldock currently holds the same role at Shop Direct, the UK’S second largest pure-play online retailer. Hyett said given his background, “it’ll be interesting to see what he makes of Dixons Carphone’s 1,600-plus store estate”. Britain’s financial watchdog is considering allowing small businesses to complain to the Financial Ombudsman following scandals involving Royal Bank of Scotland and Lloyds. The FCA is proposing that 160,000 additional SMES, charities and trusts be able to refer complaints rather than having to go to court. FCA chief executive Andrew Bailey (pictured) said it comes as some small businesses “currently find it hard to achieve a fair outcome in disputes with financial services firms”.