Yahoo Finance Dixons Carphone beats sales forecasts as consumers keep spending
Dixons Carphone said it had seen little sign of a consumer slowdown as it edged up its profit forecast for the year on the back of continuing sales growth in the fourth quarter.
Seb James, chief executive, said “the UK consumer continues to be active in the market” in a trading update that revealed a 2pc revenue increase in the final three months, compared with last year. Analysts had predicted growth of around 1pc.
In the UK and Ireland, the dominant part of Dixons Carphone’s business, sales were up 2pc in the fourth quarter on a like-for-like basis, and 4pc for the year.
The growth would have been stronger, Dixons Carphone said, had Samsung not delayed the release of its flagship S8 smartphone. It made its debut in late April, just before the end of the quarter, following the South Korean giant’s exploding batteries scandal.
The previous model, the S7, was launched in mid-March over a year earlier, boosting fourth quarter smartphone sales for Dixons Carphone.
Nevertheless, the retailer narrowed its profit forecast for the year to the upper end of the previously announced range. Full year profit before tax is expected to come in at between £485m and £490m, compared with earlier guidance of £475m to £495m.
The move boosted Dixons Carphone shares by more than 6pc by late morning, as they regained some of the ground lost since the Brexit referendum. The retailer was viewed as doubly exposed to the decision to leave the EU, as it imports almost all its stock and analysts wrongly assumed there would be a heavy blow to consumer spending.
Dixons Carphone shares remain more than 30pc below their peak at the turn of last year, however.
Mr James said: “Despite a lively political backdrop, we have been able to continue to grow our business and maintain very high levels of customer satisfaction across the group.
“We have continued to evolve our approach to multi-channel and we have gained an even better understanding of how the online and offline worlds work together.
“Our view is that the UK consumer continues to be active in the market, but we anticipate no let-up in their - very rational - view that price and service are critical factors in deciding where to shop.”
The broker RBC argued that the slump in Dixons Carphone shares since the referendum has been unjustified. Analyst Richard Chamberlain said Mr James’s plans to push into connected home services for consumers and software for other retailers could deliver more growth.
