Electricals powerhouse Dixons Carphone posted a 17% surge in full year profits this morning. Here’s the City’s reaction.

”EBIT grew healthily thanks to further operational efficiencies following the merger of the two brands, and is further evidence that this was a shrewd partnership.

Unlikely to come under considerable threat any time soon, Dixons dominates the UK electricals market with a considerable market share lead over its closest rival Argos.

However it will become increasingly difficult to find opportunities for growth in the UK.…a focus on developing its Knowhow and Connected World Services businesses, as well as further developments to its European offer will be vital for continued group growth in revenue and profitability.” - Andrew Stevens, lead analyst, Verdict Retail

 

“As the biggest of the “big ticket” retailers, Dixons Carphone has been hard hit in the post-Brexit sell-off on the stockmarket, but the company is relying on that old chestnut, “increased market share”, to carry it through the troubled times ahead.

The divisional split shows that the core UK business (and “old” Carphone Warehouse, if truth be told) was the big driver of the 17% profit growth at Dixons Carphone, contributing £365m to the overall £468m operating profit, with the fledgling Connected World Services business contributing just £7m in profit.” - Nick Bubb, independent analyst

 

”The outlook for Dixons Carphone has taken a turn for the worse in the wake of the vote for Brexit. The prevailing sense of uncertainty will, in our view, undoubtedly result in declining consumer confidence and deferral of more discretionary spending, especially on big ticket items such as electricals.

On the currency front, with the majority of products being priced in dollars out of the Far East (even if purchased in sterling), the bought-in cost of products looks set to rise, although Dixons Carphone’s scale and supplier relationships should offer greater protection than for smaller and weaker competitors.

While we believe the company will fare better than most and remain a market share gainer in its product and service markets, no doubt uncertainty and volatility will act as a drag on investor sentiment over the short-term.” - David Jeary, equity analyst, Canaccord Genuity

 

“FY16 prelims highlight the extent of progress made by the group post-merger and the strong position Dixons Carphone finds itself in across its core markets.

With Sprint, management is confident of delivering consistent profits from its JV, and the roll-out of Honeybee across the wider Sprint network offers upside.

Near-term uncertainty may impact sentiment/consumer confidence, but business fundamentals remain strong with a c. 20% sell-off in the shares overdone in our view.” - Alistair Davies, analyst, Investec