Dixons Carphone warns on profit, pulls guidance

Electrical retailer Dixons Carphone warned on profits, pulled on guidance and placed its final dividend on review as the coronavirus pandemic hit trading.

The company had guided for pre-tax profits of £210m and a lowering of net debt. On Thursday it reported a 24% fall in like-for-like mobile phone sales growth in the UK and Ireland in the three weeks to March 21.

However, it sold more laptops, televisions, gaming consoles and freezers as people were forced to work from home, schools were shut and panicked Britons stockpiled food and toilet paper.

With stores now shut as a result of a government imposed lockdown, Dixons was looking to online operations to mitigate the £400m it would normally receive from stores at this time of year, but “overall the loss of sales will adversely impact our full year profitability and cash position".

"Online trading has been very strong in all countries over the last two weeks as people have been preparing to work from home and use essential technology to continue their lives during the coronavirus outbreak. Early signs are that this strong trading has continued since stores closed and will help to compensate for lost store sales," the company said.

The group said that in the 11 weeks to March 21 electricals like-for-like sales rose 8%, reflecting a strong recent uplift of 23% in the last three weeks.

Overall group like-for-like sales were up 4% over the same period off set by the slump in mobile phone sales.

The company said it was taking measures to preserve cash during the crisis by taking advantage of the government's multi-billion pound bailout package, controlling discretionary spending, lowering capital expenditure, reducing stock ordering and deferring tax payments.

Hargreaves Lansdown analyst Sophie Lund-Yates said that if the pandemic resulted in a longer-term economic slump, Dixons’ sales "could be challenged for a while. In uncertainty people are a lot less eager to upgrade their TV or washing machine".

"On the plus side trading recently had been very strong, with a surge in demand for things like laptops and printers as people prepared to work from home, as well as fridges and freezers as people stocked up on food," she said.

"It will help that the tills have been stuffed with more cash in recent weeks, but we’ll have to wait and see whether the extra padding offers enough protection as the current disruption drags on.”