The new boss of Dixons Carphone, Alex Baldock, pulled no punches this week when he slammed his predecessor and issued a profit warning.

In an unscheduled update and a later conference call with analysts, Baldock lashed out at Dixons Carphone’s former management, led by chief executive Seb James.

He said Dixons Carphone’s opportunity lies in making the most of its strengths, but maintained that the retailer is “nowhere near doing” that.

“Nobody is happy with our performance today,” he said.

He cited “underinvestment” in the colleague and customer experience and went as far as to say the post-merger integration of Dixons and Carphone Warehouse was only “part-done” and the execution had been “uneven”.

“We will bring greater conviction and discipline to our execution,” he said. “We won’t tolerate our current performance in mobile, or as a group. We know we can do a lot better.”

The attack was in stark contrast to what Baldock said at the time of his appointment: “Seb and the team have achieved an extraordinary amount, not least reinforcing Dixons Carphone’s position as a leading electrical and mobile retailer in Europe at a time of wrenching change.”

Subsequently, his strong criticism occupied as many column inches as the top line facts: pre-tax profits will plummet 21% to around £300m in the current financial year, and 92 Carphone Warehouse stores have been earmarked for closure. 

Quick off the mark

It was the second statement from the former Shop Direct chief, who disclosed some radical changes just three weeks into his tenure at the electricals chain.

He took the bull by the horns with the initiation of a new streamlined leadership structure, which resulted in the exit of two directors and swept away unnecessary layers to speed up decision making.

Clearly Baldock was wasting no time in putting his stamp on the business. 

But as the old guard moved to pastures new, it was expected that data-savvy Baldock would inject fresh life into the group but not that he would rip apart the record of his predecessor and cast such doubt upon the extent of progress made.

So, his trashing of the business he inherited – including some of the things for which it was previously highly regarded – surprised many observers and begs the question: just how bad are things at Dixons Carphone?

All doom and gloom? 

James was often described as ebullient for his positive outlook and dismissal of analyst concerns.

Riding on the success of the merger of electricals giant Dixons and mobile phone specialist Carphone Warehouse, he hailed the benefits of its new three-in-one superstores, spoke of being partially protected against price rises post-Brexit and waxed lyrical about a new membership scheme to meld its retail and services offer.

However, he was criticised last year for failing to spot (or flag) growing concerns about a weakening mobile phone market and a significant move among consumers to ‘SIM only’ phones.

He left under a cloud to his new job at Boots as UK managing director, after Dixons Carphone’s profit warning in August 2017 seemed to come out of nowhere.

Baldock justified his comments this week about Dixons Carphone’s failings, by saying they stemmed from a desire to be “upfront” and transparent from the outset, starting with a frank review of the current health of the business.

In his first eight weeks, he said he has identified various issues in the core business – above and beyond the well documented troubles in the mobile business a more recent contraction of the electricals market.

According to Baldock, Dixons Carphone has “unclear direction” and has spent too much time “dabbling in distracting and peripheral opportunities”. Four weeks after he joined, the group’s B2B software business, Honeybee, was disposed of. 

He also said Dixons Carphone was not an “easy enough” place to work and is eager to rectify that, as well as addressing poor customer service standards at its contact centres.

Remedying that will include investing £30m in measures to increase capacity for calls, improved cross-training and speech analytics to spot pain points more quickly.

“We have underinvested in training and we are now putting that right,” he insisted.

He also said the online business needs work too and pointed to a “tonne of data” the retailer is yet to make the most of.

Laying Dixons Carphone’s failings bare unsurprisingly triggered a deep plunge in the Dixons Carphone share price. 

But was it necessary?

Clearly not all is rosy in the garden and, as the new boss, Baldock is eager to mark the separation between the old regime and the new. But, even if Baldock’s words were “in the interest of clarity and openness”, the tone with which he shamed his predecessors was seen by many as classless.

The City has long been bearish towards Dixons Carphone – cynical about its supposed resilience to Amazon and Brexit, which has clearly driven up sourcing costs, and James may be guilty of having played down some of these threats.

But Baldock’s job now is to find the skeletons in the closet and expel them, not to school the former management.

If all goes well, Baldock will no doubt be praised for what will be seen as candid remarks, which exposed deep seated glitches in the Dixons Carphone group.

But he will have egg on his face if his attempts to reboot the electricals chain fall flat.