Dixons Carphone has warned that profits in its new financial year are expected to fall and detailed plans to shutter more than 90 stores.
In his first update since becoming chief executive, Alex Baldock cautioned that earnings would come in at about £300m as the electricals market contracts.
That is a steep decline on the £382m that Dixons Carphone expects to report for 2017/18.
Dixons Carphone reported that full-year group revenue rose 3% year on year in 2017/18, while like-for-likes were ahead 4% and it “maintained market leading share”.
At the core UK and Ireland business, full-year like-for-likes advanced 2% and 1% in the fourth quarter. There was “strong growth” from international operations.
However, in 2018/19 factors including “necessary action to correct recent underinvestment in our colleagues and customer proposition”, “further contraction” in the electricals market and “market and contractual pressures” in the mobile phones market will hit profits.
The retailer unveiled plans today to close 92 standalone Carphone Warehouse stores this year as its addresses previously reported weakness in its mobile phone business stemming largely from the sim-only trend.
A spokeswoman said that no job losses were expected as staff would be redeployed to nearby stores.
Baldock said: “Eight weeks in the business have cemented my optimism about Dixons Carphone’s long-term prospects. I’ve found exceptional strengths, and though there’s plenty to fix, it’s all fixable.
“We’re number one in each of our markets, with people and capability no competitor can match. Our opportunity lies in making the most of those strengths, which we are nowhere near doing. And we must – nobody is happy with our performance today.
“We’re getting on with it, through a new leadership team and structure that’s promoted top talent, cleared away unnecessary layers and silos, and started to speed up decision-making. We’re already giving new impetus to areas crucial to our transformation such as data and analytics, marketing, digital, services and technology.
“And we’re working at pace to bring clear long-term direction to the business. We will give our customers what they value while making the most of our many strengths.
“We will address underinvestment in important areas of the colleague and customer experience. We will sharpen our focus on the core business and on fewer, bigger initiatives.
“We will bring this business closer together, the better to give customers the full benefit of everything we have to offer them, and to deliver that through a truly integrated business – it is not today. We will also bring greater conviction and discipline to our execution.
“Right now, with our international business in good shape, we’re focusing early action on the UK. In electricals, we’re focused on gross margin recovery. In mobile, we’re stabilising our performance through improvements to our proposition and network agreements.
“In both, we’ll work hard to improve our cost efficiency. We won’t tolerate our current performance in mobile, or as a group. We know we can do a lot better.”
Baldock will say more about his plans next month at the prelims, and give a fuller update in December.