Dixons Carphone rings changes after profit crashes

Dixons Carphone laid out its plans for the year ahead – many of them digitally influenced – after reporting a significant sales and profit decline for the 12 months to 27 April 2019.

In its full-year results announcement, the consumer electronics retailer revealed pre-tax profit was down by 22% from £382 million to £298 million. The group, which operates Currys PC World and Carphone Warehouse, made a statutory loss after tax of £320 million compared to a profit of £166 million one year before.

The group’s UK and Ireland mobile sales fell by 11% to £1.99 billion, prompting CEO Alex Baldock to say the company is accelerating its transformation of the department. It will involve speeding up the integration of its mobile and electricals divisions, which still operate quite separately five years on from the Dixons-Carphone Warehouse merger.

Changes are planned in store and online, but some of the noteworthy developments mapped out for the 12 months ahead involve the combination of the two.

The group said its Currys PC World arm will increase its online range by 5,000 products, which will represent an increase of over 60% year on year. A “smartphone-first” approach is promised, which will result in the launch of a transactional mobile app before the financial year ends.

In 2018, Currys PC World launched an augmented reality app enabling online shoppers to envisage what products would look like in their homes before making a purchase.

Dixons Carphone also said it would be strengthening online margins by making it simpler for customers to adopt credit and services via its websites.

It added that slower moving lines will move to online only, helping it create more space in its stores for staff to offer face-to-face advice, and demonstrations. This move is expected to provide extra room for growth categories such as gaming, large screen TVs and home tech.

Some 5,500 ‘Store Mode’ tablets will be rolled out in the coming months, enabling store staff to sell the whole online range in stores, calculate credit deals for customers, showcase product videos, and access company information. Soon, these tablets will be fitted with point of sale capability so transactions can be completed in-aisle.

The group has committed to making its biggest investment in stores for five years, with the introduction of 'Experience Zones' and the roll-out of 'Gaming Battlegrounds' forthcoming.

The full-year report recorded costs of £14 million associated with the data breach incident announced in June 2018 when the personal information, names, addresses and email addresses of ten million customers were compromised. These costs were related to the investigation and remediation activities, which ultimately declared that no customer bank details were taken and concluded there was no evidence of fraud resulting from the breach.

An additional £6 million in costs related to the incident will be recorded this financial year.