Dixons Carphone boss Alex Baldock has set out his strategy to focus on online and credit as it dials up a £440m half-year pre-tax loss.
A £490m charge, primarily relating to a loss of goodwill of its mobile business, led to Dixons Carphone plunging into the red. Excluding the charge, the electricals group would have made a £50m pre-tax profit, 31.5% down on last year.
Despite the dramatic loss, like-for-likes edged up 2% over the first half to October 27, accelerating to 4% in the second quarter. Dixons Carphone confirmed its full-year headline pre-tax profits guidance remained unchanged at around £300m.
Baldock, who joined Dixons Carphone earlier this year, set out his strategy for the electricals group that, similar to the turnaround he recently executed at Shop Direct, focuses on two big opportunities: online and credit. He is also seeking to revitalise Dixons Carphone’s mobile business and make the customer experience easier.
Meanwhile, the business is offering 30,000 colleagues new share awards to help align the business behind the new strategy.
Baldock has set a group EBIT margin improvement of at least 3.5% over the next five years.
The retailer has identified £200m of gross costs savings available for reinvestment and margin progression.
He has earmarked an additional £200m of capex over three years to accelerate Dixons Carphone’s transformation, which will be funded by working capital improvement. Baldock expects to generate more than £1bn of free cash flow over the next five years.
Baldock said: “We believe that Dixons Carphone is now on the path to sustainable success. We have set a clear long-term direction that will deliver more engaged colleagues, more satisfied customers and a more valuable business for shareholders.
“We have powerful strengths, as a growing market leader with amazing people and capabilities no competitor can match. Our plan builds on those strengths. We’re focusing on our core, and on four things that matter most: two big profitable growth opportunities in online and credit; revitalising our mobile business; and giving customers an easy experience. We’ll deliver these through capable and committed colleagues, working in one joined up business with strong infrastructure.
“There are headwinds and uncertainty facing any business serving the UK consumer. We’ve had our own challenges and our plan will take time. But with this plan, we can now see the way to unleashing the true potential of this business. We believe in our plan, are underway making early progress and determined to make it a lasting success.”
Alex Baldock is speaking at Retail Week Live 2019, which takes place on 27 and 28 March. Find out more details here.