The merger between Dixons and Carphone Warehouse in 2014 continues to look a very poor move for the former in hindsight. Today's full year results from Dixons Carphone (DC.) revealed the mobile part of the business remains a big drag on performance.
The shares fell 10.1% to 77.8p as the company noted total positive cash flow from mobile will be lower than its previous 2023/24 guidance of about £200 million, instead in the range of £125 million to £175 million.
Carphone Warehouse’s business model was built on people frequently upgrading their phones but that trend has dissipated as the market has matured.
The group posted another annual loss today, blaming the cost of closing mobile phone stores and the impact of the Covid-19 crisis on sales.
Pre-tax losses for the year through March amounted to £140 million, compared to losses of £259 million a year ago, as revenue dropped 3% to £10.17bn.
Adjusted profit more than halved to £166 million, down from £339 million and around £44 million below guidance that had been reiterated in January.
The company did not declare a dividend. On its outlook, the company said it was closely monitoring external forecasts and was prepared for a range of economic outcomes.
'Due to the high levels of uncertainty we are not issuing guidance on electricals sales or profits for the 2021 financial year,' it said.
Still, it forecast UK and Ireland operating losses to be 'slightly worse', due to the impact of Covid-19 on trading.
The positive was a big rise in online sales with electricals business up 166% in April when lockdown was at its height.