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Dixons Carphone share price plunges after retailer reveals £440m loss

Consumers are holding on to their handsets for longer as the smartphone market matures and the price of premium handsets hits £1,000

Ben Chapman
Wednesday 12 December 2018 10:58 GMT
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The retailer booked £490m of one-off charges with most relating to a write-down of the value of its mobile phone business
The retailer booked £490m of one-off charges with most relating to a write-down of the value of its mobile phone business

Dixons Carphone unveiled a huge £440m half-year loss on Wednesday, sending its share price tumbling 14 per cent.

The retailer booked £490m of one-off charges with most relating to a write-down of the value of its mobile phone business.

The group, which also includes Currys PC World, posted a pre-tax profit of £54m a year ago but has been struggling as phone sales slow.

Consumers are holding on to their handsets for longer as the smartphone market matures and the price of premium handsets hits new highs of more than £1,000.

That’s bad news for Dixons Carphone which relies on a steady stream of shoppers coming into its stores to upgrade.

To combat the trend, which is exacerbated by the terminal decline in footfall on many UK high streets, Dixons Carphone announced in May that 92 out of 700 stores would close.

Despite tough conditions, the company reported underlying profits – stripping out one-off costs – of £50m, ahead of analysts expectations but still down on £73m in the first half of last year.

The company said it had “substantial” contingency plans in place to mitigate expected disruption in the event of a no-deal Brexit.

Alex Baldock, chief executive of Dixons Carphone, said the company was investing in revitalising its mobile business, its online offering and improving customer service.

“We’re underway and investing in all of these, including giving our colleagues at least £1,000 of shares, making every colleague a shareholder.

“We strongly believe aligning and energising the business behind our strategy in this way will benefit customers and shareholders.”

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Ed Monk, associate director for personal investing at Fidelity, said the update was more evidence of pain on the high street but pointed to some positive signs.

“A restructuring plan is underway with a focus on online sales and credit – allowing shoppers to purchase items with borrowed finance.

“There was also the announcement of an employee share scheme that means staff with a year’s service can get up to £1,000 of company shares.

“That’s a sensible move as the company looks to differentiate itself from online rivals like Amazon, with better in-store service.”

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