Dixons Carphone reports drop in profits, but Baldock insists business is on track

Dixons Carphone has revealed a drop in pre-tax profits for its half year ending 26 October 2019. Profit before tax dropped to £24 million from £60 million in the same period last year. Group EBIT fell 49% to £36 million.

Much of the cause of this drop was pointed at dwindling mobile sales, which has been felt across the industry. Dixons Carphone reported mobile sales decreased 18% to £830 million. Overall UK and Ireland electrical sales only dropped 1% to £2 billion.

But CEO of Dixons Carphone, Alex Baldock, said the retailer is on track to deliver on expectations this financial year.

“In a tough UK electricals market, we’ve gained significant share, and strengthened our market leadership. Our planned investments in the colleague and customer experience have played a big part in this resilient performance, demonstrated by sharply increased customer satisfaction scores. Our big international business also registered market share gains in every territory, with solid sales and margin improvements,” he said.

“And we’ve taken important strides in our transformation. It’s easier for customers to shop how they want: we’re now gaining share online as well as in stores, where we are investing to create exciting, enticing stores. More customers can also afford the tech they want: we now won’t be beaten on price, and more are taking up our credit offer. More, too, are getting the most out of their tech through our services.”

Over the period, Dixons Carphone said it had improved its digital marketing efforts in the UK by deploying AI-driven emails, while increasing site speed by 30%. Artificial intelligence was also used to power online product recommendations.

Since the end of the half-year period, the retailer launched its Currys PC World app which has been downloaded over 100,000 times, with data suggesting customers are more likely to convert and spend more on the app compared to mobile web.

The retailer also detailed its plans to “make stores exciting” by giving space to high-growth products such as large-screen TVs, while slower moving products are now online only.

Over the last year or so, Dixons Carphone has been upgrading a number of its Currys PC World stores to feature experience zones, such as in-store gaming areas. To date, it has created 40 gaming battlegrounds, 52 TV experience zones and 72 experience areas for domestic appliances.

It has remodelled 81 UK stores so far, and will invest in a further 64 this year. The stores now work with the retailer’s online offering, thanks to colleagues equipped with tablets which provide in-store customers with the full range, driving a 35% increase in online sales made in store. Its reserve and collect service now accounts for 33% of online sales.

Baldock added: “Good progress, yes, but all of us at Dixons Carphone are shareholders, and conscious that our business is still nowhere near its full potential. We’re determined to realise that potential, and confident we’re on the right path to do so.”