Dixons Carphone hit by sterling slump

Dixons Carphone now expects headline pre-tax profit for the full year to be in the range of 360m to 440m
Dixons Carphone now expects headline pre-tax profit for the full year to be in the range of 360m to 440m
0
Have your say

​​​Dixons Carphone ​has downgraded ​profit ​expectations as the pound's collapse has sent the cost of new mobile phones soaring​ and ​customers are holding on to old​ handsets for longer.

In an unscheduled trading update for the 13 weeks to July 29, the electricals giant ​said it faced challenging conditions in the UK mobile phone market.

​Chief executive Seb James said: "Over the last few months we have seen a more challenging UK post-pay mobile phone market.

"Currency fluctuations have meant that handsets have become more expensive whilst technical innovation has been more incremental.

"As a consequence, we have seen an increased number of people hold on to their phones for longer, and while it is too early to say whether important upcoming handset launches or the natural life cycle of phones will reverse this trend, we now believe it is prudent to plan on the basis that the overall market demand will not correct itself this year."

Dixons Carphone now expects headline pre-tax profit for the full year to be in the range of £360​m to £440​m.​ ​This is down from analyst forecasts of between £460​m and £485​m​ and well below the £501​m booked last year.

The firm also said it would take a £10​m to £40​m hit from changes to EU roaming legislation.

Mobile phone retailers take a cut of additional charges levied by telecoms firms, including roaming, but the EU's decision to scrap roaming charges means they will now miss out.

The trading update showed that UK like-for-like sales ​rose 4​ per cent​ in the period, while total sales rose 1​ per cent​.

Across the group, which also operates in Scandinavia and Greece, ​like-for-like ​sales ​rose 6​ per cent​.

Mr James said he was encouraged by the UK performance in light of strong comparative sales following last year's European football championship.

"In all of these markets we have seen growth in revenues, market share and profitability with overall product margins remaining flat in electricals," said ​Mr James.