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Dixons Carphone (LON: DC) has reported a 24 percent plunge in profits.
The UK electricals and mobile phone retailer said that it had “plenty of work to do” after profits fell from £500m a year earlier to £382 million.
“Recent events have underlined that we have plenty of work to do, and it will take time, but I’m even more confident than the day I took the job in our long-term prospects,” said Alex Baldock, the new chief executive who took over from Seb James in April.
Last month, the group warned against falling profits this year as it had already flagged in April.
As consumers update handsets less frequently and switch to sim-only deals, the retailer shows signs of struggling and has announced plans to close 92 Carphone Warehouse stores this year. The group has blamed the fall in the value of the pound following Brexit.
“How much of those sales can be retained through its other stores and online channel will be pivotal in deciding what to do with the remainder. With EE, O2 and Vodafone on every high street, retaining sales will be difficult,” said Patrick O’Brien, the UK retail research director at Global Data, about the Dixons Carphone store closures.
“In the coming months, Baldock has the tricky contract renegotiations with those carriers to deal with. He believes that its capital-intensive model needs to change and that the profitability of those contracts needs to improve. However, mobile contracts sold through third parties are the least profitable for the networks and there is even the possibility of one or more pulling out of Carphone Warehouse entirely. Vodafone did exactly this in 2006.”
Dixons Carphone revealed a data breach last week, which involved unauthorised access to 5.9 million customers’ cards.
“We are extremely disappointed and sorry for any upset this may cause. The protection of our data has to be at the heart of our business and we’ve fallen short here,” said Baldock.