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Dixons Carphone mobile slump offset by TV and hairdryer sales | Business

Dixons Carphone, Britain’s biggest electrical and mobile phone retailer, has suffered a further slump in mobile sales but benefited from a surge in sales of supersize TVs and Dyson hairdryers.

The company, which owns the Carphone Warehouse and Currys PC World chains, posted a 9% fall in like-for-like mobile phone sales in the UK and Ireland in the 10 weeks to 4 January but this was offset by a 2% rise in electricals sales – better than expected – and overall group sales were flat. Mobile sales had been even worse in the first half of the year, down 18% at established stores.

Its shares rose almost 5% to 149p. They were changing hands for little more than 100p last summer but are still well down on their 500p level at the end of 2015.

Like-for-like sales have become the benchmark in the City for judging the current performance of retailers. Typically represented as percentage growth rates, like-for-like sales measure sales at stores that have been open for at least a year, stripping out the impact of sales at newer stores. The idea is that they allow a more transparent comparison of a retailer’s sales performance over a certain period of time, when compared with the same period of time a year earlier.

However, there is no formal industry standard. This means that some companies include new extensions to stores in their like-for-like sales, while others include sales generated by a customer paying with a voucher. Critics of the measure say that like-for-like sales do not always give an accurate picture of a retailer’s health. They argue that of greater relevance is profitability and how well a company is adapting to challenges such as the living wage and online shopping revolution.

Dixons emerged as one of the winners in the tough electricals market, which declined 3% over the Christmas period. Partly owing to its price match promise, it beat rivals such as John Lewis and sold 75% more mega TVs with 65in-plus screens and 20% more Dyson hairdryers – which start at about £300 – than a year earlier, as well as 8,000 smart speakers each day. Shark vacuum cleaner sales doubled. Fitbit smartwatches, Apple AirPods and the Nintendo Switch video game console were also among the festive bestsellers.

This contrasts with the performance of its mobile phone business, Carphone Warehouse, which is expected to make a loss of £90m in the year to the end of April 2020 and will not break even before 2022. However, Dixons stuck to its previous guidance after issuing a profit warning in June and its shares rose more than 5% on relief that trading had not worsened. The group as a whole is set to make an adjusted pre-tax profit of £210m, down from last year’s £298m.

Mobile sales have been hit as customers hang on to their handsets for longer, sometimes waiting three to four years before buying a new phone. This could change as more 5G next-generation smartphones launch this year, said Alex Baldock, the firm’s chief executive. More customers are also opting for cheaper sim-only deals; buying phones and sim cards separately.

The company has fought back by renegotiating its network contracts, expanding its sim-only deals and credit-based bundles, speeding up its website and launching a mobile app at Currys PC World. It is also merging its mobile and electricals divisions.

Baldock said there would be fewer mobile-only shops in future – it currently has about 550 in the UK – but did not announce any imminent store closures.

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He stressed that the retailer had invested tens of millions of pounds in its 300 larger stores, mainly in retail parks, and said its 70 new “gaming battlegrounds”, where customers can play video games, were popular.

Russ Mould, the investment director at the stockbroker AJ Bell, said: “Dixons has been in turnaround mode for some time and this update suggests solid progress is being made in almost all parts of the business. Sadly, the mobile arm continues to be a real drag and that’s partially down to consumer shopping trends. The nation seems happy to load up on giant TVs and buy the latest gadgets but there isn’t much excitement about having the latest handset.”

Richard Lim, who runs the consultancy Retail Economics, said Dixons’ price promise to match any retailer, online or in-store, resonated well with shoppers. “Looking forward, the Euros [football’s European Championship], Olympics and a new generation of computer consoles will help support sales growth this year.”

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