MPS ask Dixons Carphone for pension fund reassurance
EMBATTLED retailer Dixons Carphone is facing political pressure to explain the state of its pension scheme after a shock profit warning caused its share price to crash.
The work and pensions select committee is writing to the chain to seek assurances that its pension fund will be well-funded despite recent financial woes.
Dixons Carphone’s shares dropped by as much as 20pc last week after revealing that pre-tax profits for in 2017 will come in at the top end of analyst expectations at £382m, but would drop to around £300m this year.
The UK deficit of the company’s defined benefit pension scheme expanded by £117m to £589m at the last count, according to its annual report. The deficit has since shrunk to £492m.
Frank Field, the committee chairman, said the group of MPS would be sharpening its focus on mergers which are now showing signs of strain.
He said: “We will be writing to the pensions trust at Dixons Carphone and will be asking them what they have been doing to tackle the deficit.
“Mergers don’t always result in the gains they hope for when two companies come together, and that is why I am concerned for the pensions side of this business.”
Dixons and Carphone Warehouse came together in a £3.8bn tie-up in 2014. The new boss of Dixons Carphone has pinned the blame for the retailer’s troubles on Sebastian James, his predecessor, claiming it had been too “inwardly focused” and there was no clear direction for the business.
Alex Baldock, who took over as chief executive in April, said the company was not making the most of its strengths, as he laid bare plans to close 92 stores.
Shares in Dixons Carphone peaked at 500p in 2015 but have since lost more than half their value. A spokesman said: “Dixons Carphone can reassure the committee that our pension scheme is well funded with annual contributions of £46m.”