Shares in unloved electrical-to-telecommunications retailer Dixons Carphone (DC.) spark up 3.1% to 169.3p as investors breathe a sigh of relief that full year earnings guidance has been left intact.
But while the company may have swerved issuing another profit warning there is still disappointment that this summer’s World Cup in Russia failed to trigger a more meaningful uplift in consumer electronics sales during the quarter to 28 July.
BALDOCK BRIEFS THE MARKET
In a brief update new CEO Alex Baldock reports flat group like-for-like sales for the 13 week period with same-store sales in the core UK & Ireland business also flat.
While World Cup fever boosted demand for the Currys PC World-to-Carphone Warehouse brands owner’s consumer electronics wares, principally flat screen TVs, softer white goods and computing markets and ongoing struggles in the mobile segment prevented Dixons Carphone from growing the top line.
Besides hot competition from Amazon, consumer spending remains under pressure, with wage growth weak and Brexit uncertainties dampening demand for the hard-pressed high street retailer’s big ticket items such as laptops and fridge freezers.
Mobile like-for-like revenue declined by 1%, reflecting a reduction in the postpay market but with Baldock flagging continued market share gains in the SIM Only and SIM Free segments.
PROFIT GUIDANCE UNCHANGED
Reassuringly, online sales grew by 13% and for now, recent cyber crime victim Dixons Carphone is sticking with its full year profit before tax (PBT) guidance of ‘around £300m’, provided in a punishing profit warning in May.
All other annual guidance is unchanged and Dixons Carphone’s international performance is described as ‘solid’, like-for-like sales up 9% in Greece (albeit a small part of the business) and the Nordics’ like-for-likes coming in flat.
‘We’ve maintained or grown our leading market positions, and our full year PBT guidance of around £300m remains unchanged,’ says Baldock, adding ‘we’ve made good progress in setting a clear long-term direction for the business, one that sharpens our focus on the core, and that better joins up both our offer to customers and our business behind the scenes.’
Yet Langton Capital’s seasoned retail sector sage Nick Bubb appears unimpressed, commenting: ‘We flagged yesterday that the consensus for today’s first quarter trading update was that overall group like-for-like sales would be flat and that is indeed the case.’
But Bubb adds: ‘The main interest was in what the new CEO Alex Baldock said about the key negotiations with the mobile network operators (which are rumoured to have gone badly?), but he ducks the issue, ahead of the interims in mid-December and simply says “First quarter performance was in line with expectations. We’ve maintained or grown our leading market positions, and our full year PBT guidance of around £300m remains unchanged”.'
