Dixons Carphone has reported plummeting profits despite sales inching up in its half-year.
The electricals specialist’s group pre-tax profits fell 70% from £135m to £46m in the 26 weeks to October 28.
In its core UK business, pre-tax profit tumbled at the steeper rate of 73.8% to £34m.
In August, at the time of its profit warning – which was sparked by a faltering UK mobile market – Dixons Carphone said its full-year profits were likely to plunge to between £360m-£440m.
But today the retailer said it expected to deliver full-year profits within a revised range of £360m-£400m.
Dixons Carphone said it made a “conscious decision” to drive sales during the period.
Group electricals sales jumped 7%, and 6% in the UK and Ireland.
By contrast, UK and Ireland mobile like-for-like sales fell 3%, reflecting the weaker postpay mobile market.
Group like-for-likes rose 4% while total sales edged up 3% on a reported basis and 1% on a local currency basis to £4.86bn.
A strong performance in both the Nordic countries and Greece was tempered by a weaker performance in the UK, although like-for-likes and total sales still edged up 2% in Britain, with sales hitting £3.009bn.
New mobile business model
Boss Seb James reiterated Dixons Carphone’s commitment to changing its business model to “cement [its] place in a changing world”.
He said: “As we said in August, the UK postpay mobile phone market is tougher, with a combination of higher handset costs and relatively incremental technology growth continuing to cause customers to hold on to their handsets for longer and some to choose a SIM-only contract in the meantime.
“Throughout the period, we made a very conscious decision to fight hard to drive sales in our product offering, and this has impacted mobile profitability. Vitally, though, these actions have helped maintain scale, reinforce our position as market leader, and ensure our relevance to the customer.
“We believe that we can, over time, reduce the complexity and capital intensity of our mobile business model, and increase the simplicity and profitability of what we do.”
James said the start to peak trading has “gone well” hailing record sales in all territories.
“Everywhere, we have seen material share gain and this shows that our retail businesses continue to be able to entice customers into buying the amazing new technologies that we offer. We must remember, though, that there is plenty of peak left to go,” he said.