Dixons Carphone profit halves as lockdown bites

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
People walk past a Carphone store in Central London, on July 31, 2018. Dixons Carphone has apologised to all of its customers after revealing that a 2017 data breach affected personal data held in an additional 8.8 million customer records. The admission is the second revelation related to the data breach in six weeks and the third since 2015. (Photo by Alberto Pezzali/NurPhoto via Getty Images)
Dixons Carphone full-year sales fell by 1%, while sales at its UK and Ireland mobile phone business collapsed by 20%. Photo: Alberto Pezzali/NurPhoto via Getty Images

Electrical retailer Dixons Carphone (DC.L) has blamed the COVID-19 pandemic for halving annual profits.

Dixons Carphone said on Wednesday it made an adjusted pre-tax profit of £166m ($209m) in the 53 weeks to 3 May, compared to an adjusted profit of £339m in the prior year. This year’s profit was £44m below guidance given by the company in January.

On a non-adjusted basis, Dixons Carphone lost £140m in the year, an improvement on last year’s loss of £259m.

The retailer has been in the midst of a turnaround plan and blamed the COVID-19 pandemic squarely for the poor performance.

“The first ten months of the year was a story of delivering on our promises and accelerating the transformation of Dixons Carphone,” chief executive Alex Baldock said in a statement.

“With COVID-19, our immediate priorities abruptly changed to keeping everyone safe, helping our customers and securing our future.”

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Dixons Carphone was forced to close its stores due to lockdown in the UK in March.

Sales for the full financial year fell 1% to £10.1bn, dragged down by a poor performance for the company’s mobile phone business in the UK and Ireland. Smartphone sales fell by 20%.

Independent retail analyst Nick Bubb said: “The results themselves are nothing to write home about, given the big loss in UK Mobile. And shareholders may groan to hear that the UK Mobile loss in the new year is now expected to be ‘slightly worse’ than last year.

“There is no guidance on current trading or the outlook in the core Electricals business, although the company says that ‘technology retailing is resilient’.”

Baldock said: “We expect a weakening of consumer spending later this year and are being cautious in our planning. We've learned a lot during this crisis and will emerge a better business from it.”

Shares in Dixons Carphone fell by 2.5%.