Dixons docked £500m after stockmarket savaging

Caution should be the watchword for its execs from now on

Currys PC World: Part of the Dixons Carphone Empire (Getty)

Another day, another big British company warning the market that things aren’t going so well as its investors had hoped.

After advertising giant WPP halved its forecast for revenue growth on Wednesday, Dixons Carphone stepped up to the plate, with an unscheduled trading statement showing something even worse: the current trading year's profits will be way below those of the previous year.

Not a good look from British business.

The City had got wind that something was up, with the shares struggling of late. But no one really expected anything quite as nasty as what has emerged.

Last year, the owner of Currys PC World made just over half a billion pounds, a record for the business. It also painted a relatively rosy picture concerning its prospects going forward.

For the current year, earnings are forecast to come in between £360m and £440m, a fall of more than 10 per cent assuming a best-case scenario.

Chief executive Seb James blamed the market for mobile phones becoming “more challenging” for the dramatic fall in expectations. Handsets have become pricier, thanks to the Brexit-driven fall in the pound, and consumers are tightening their belts, holding on to their old ones for longer.

The company really, really needs the new iPhone to be a big hit because if it doesn’t tempt the punters back it’s going to make for a cold Christmas at Dixons HQ, and (perhaps) some frosty conversations about bonuses.

Lower mobile roaming charges have also hurt, courtesy of the EU, but if Brexit doubly stiffs the consumer (bank on it) by removing EU consumer protections, who knows, some of them might eventually come start trickling back to the company.

That, however, amounts to clutching at straws for Dixons. The shares lost more than 20 per cent of their value at their low point, which in real money translates (there’s that number again) into half a billion pounds off the company’s market value.

The stock is now changing hands for less than half what it was at the 12 month high.

“While the UK consumer environment seems to be holding up for us, there will undoubtedly continue to be changes in the way people buy all of the products that we sell from phones to washing machines. Change always represents opportunity, and our job is to find the propositions that keep us compelling to our customers forever,” Mr James said at the full year results.

He probably wishes he could edit that statement now.

It’s a pity really. Dixons was being talked up not so long ago as an Amazon survivor, which had taken the fight to its big American retail rival by pricing more keenly and making sure the consumer proposition was good.

It looks as if Mr James will just have to turn his mind to ferreting out some fresh opportunities from all that change he talked about.

In the meantime, I'd expect caution to be the watchword when he talks about the future. In Brexit Britain it’s the only way.