Dixons Carphone is concentrating online and on creating “exciting” stores where customers can discover technology and tap into advice, services and experience, against the background of pre-tax losses of £259m in its latest financial year.
The retailer, which operates the Currys PC World and Carphone Warehouse retail brands, said it was “making more of online and stores working together at scale”, and would make its biggest store investment in five years with the introduction of ‘experience zones’ and the roll-out of ‘gaming battlegrounds’.
Group revenue came in at £10.4bn in the year to April 27. That’s down by 1% on the previous year, or up by 1% on a like-for-like (LFL) basis that strips out the effect of store – or business - openings and closures. Sales in its core UK and Ireland market were up by 1% to £4.5bn but sales of mobile phones were down by 11% at £2.2bn, or 4% LFL in those territories. UK and Ireland online sales grew by 9% to account for 28% of sales.
International sales grew by 2%, with sales up by 12% in the Greek market and by 1% in the Nordics. Headline pre-tax profits of £298m were down from £382m a year earlier, but after one-off costs of £557m – including a £225m write-down in the value of the retailer’s mobile division, which has suffered as consumers keep their existing phones for longer, costs related to a 2018 data incident and to a £30m FCA fine related to how its Geek Squad sold mobile phone insurance – the company reported a bottom-line pre-tax loss of £259m.
The retailer said that the total equity of the group had fallen from £3.2bn to £2.6bn over the year, reflecting statutory losses fo £320m, currency exchange loses of £30m and £107m in losses relating to its defined benefit pension scheme as well as £116m in dividend payments.
As well as focusing on online and stores, the retailer also aims to increase the take-up of its credit services - and says that the lifetime profit on credit customers is three times as high as that of other customers. However, it says it has trained 21,000 staff in how to sell credit in a compliant way.
Dixons Carphone chief executive Alex Baldock said: “The past year has seen us keep our promises to investors, delivering around £300 million of headline profit, resilient free cash flow, and continued growth in sales and market share in UK & Ireland electricals and International. And we’ve taken the first big strides in our transformation.
“But we know we have it in us to be a much more valuable business. That will take time. In December, we set out a clear strategy to help everyone enjoy amazing technology, and early progress is promising.”
He added: “We’ve made significant gains in credit and online – both big profitable growth opportunities for us. Early steps towards an easier customer experience have seen satisfaction scores start to rise. And we’ve laid important foundations for services to make our customer relationships stickier and more valuable.
“The same focus on credit, online and services will ensure our strong international business continues its trajectory of growing sales and market share, while further improving profitability.”
Currys PC World is ranked Leading in IRUK Top500 research, while Carphone Warehouse is Top50.
Online sales accounted for 28% of Dixons Carphone sales in the year - up by 9% on the previous year. The retailer said it was outperforming the market and improving its market share both online and in stores. It increased its online range by 60%, or 5,000 products during the year, and is aiming to get to 40,000. It has worked to improve the online customer experience and is to launch a transactional smartphone app next year. It also aims to make it easier for customers to use credit and services online, so “strengthening online margins”.
“We’re making more of online and stores working together at scale,” it said in its full-year statement. “Stores have to be exciting for customers to discover the right tech for them. This includes face-to-face advice, demos so customers can experience the tech for themselves and giving more space in store to growth categories such as gaming, large screen TVs and home tech.” Slower lines, it said, would be sold online and online from the store as it rolls out tablets to its stores for in-store online ordering. Customers will also be able to complete transactions on those tablets by the year-end.
The retailer is making its “biggest investment in stores in five years” through in-store experience and gaming zones.
Image: InternetRetailing Media/Paul Skeldon