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Dixons and Carphone Warehouse report rising profits as they head for connected future

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Dixons Retail this week reported a lift in online sales, turnover and profits in end-of-year results that came as the multichannel company said its now-cleared merger with Carphone Warehouse would build a business for a connected world.

The electricals retailer, which trades in the UK as Currys and PC World , said online sales had hit £1bn in the year to April 30, following ecommerce growth of 16%. At the same time, total group retail sales lifted by 3% to £7.2bn. UK and Ireland sales were also up by 3%, at £4.1bn. Pre-tax profits, after exceptional items, rose by 53% to £132.9m. The company confirmed its proposed merger with Carphone Warehouse, to create Dixons Carphone, had won unconditional clearance from the European Commission, but is still subject to clearing a number of other conditions.

Sebastian James, Dixons chief executive, said Dixons Retail was stronger, following its withdrawal from non-core businesses and markets, than it had been for a number of years. That, he said, made it well-placed to “set sail into new waters”.

The merged Dixons and Carphone Warehouse would, he said, “build what I hope will be the first and best truly multichannel proposition that allows customers not only to buy and experience the explosion of new connected products that are emerging, but also to get the advice, connectivity and services that will allow them to use technology as it should be used – to make their lives better.

“In turn, this will allow us profoundly to change the nature of what we do: we will move from a transactional to a lifelong relationship with customers everywhere.”

Dixons said that innovation around “the connected world that is already upon us” had already started in the UK. Connected World departments in five megastores already showcase home automation technologies such as heating, lights and security cameras as well as early wearable technology. With smartphone specialist Carphone Warehouse, the company would move into new product areas.

“We can truly be the go to expert for this new, exciting and complex world for customers,” Dixons said in its statement. “Not only can we help them in navigating their way to a truly connected home, we can bring existing and new services to them to keep their world functioning and connected. This will not only open up new products and services for us, but can take our relationship with our customers from a transactional one to a longer-term relationship.”

The merger will also, it says, bring “synergies” of at least £80m.

Online, Dixons said, it was “focused on delivering a world-class experience online for our customers.”

Meanwhile, merger partner Carphone Warehouse reported sales of £3.3bn in the year to March 29, 2% down on the same time last year, and profits of £127m, up from £56m last time.

Chief executive Andrew Harrison pointed to a partnership with Samsung that will see it roll out stores across Europe on behalf of the mobile phone maker, and said 4G was now a major dynamic in the mobile marketplace. He said a focus on the connected world would be a low-risk way to take the business global, while suggesting the company might sell its Virgin Mobile France business.

“The history of Carphone Warehouse has been one of anticipating change and positioning the business to take advantage of this change,” said Harrison. “Looking ahead, the shifts we see in the marketplace offer considerable opportunities to create value for our employees, our customers, our suppliers, our partners and our shareholders. From a position of strength, we are planning to take greater advantage of these developments through our proposed merger with Dixons Retail.”

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