Dixons Carphone looks for turnaround progress despite tough retail backdrop

Investors in Dixons Carphone will be nervously hoping the electronics specialist has outperformed its rivals during a difficult Christmas for retailers.

The Carphone Warehouse owner will update the market over its performance over the key Christmas period with a trading statement on Tuesday January 21.

The update comes amid a testing period for electronics retail, with some of Currys PC World’s rivals in the sector posting declining sales over the Christmas period.

John Lewis & Partners said electronics and home technology sales dived 4% for the seven weeks to January 4, despite a jump in Black Friday sales.

Meanwhile, retail analyst Nick Bubb said that Dixons Carphone shareholders may have been “concerned” after Sainsbury’s claimed its Argos business “outperformed the market” in consumer electronics.

Sainsbury’s said this despite revealing a 3.9% sales slump in its general merchandise business for the 15 weeks to January 4.

Nevertheless, investors in Dixons may be reassured by optimism among some brokers, with Goldman Sachs advising to buy shares in the company this week and raising its target share price from 130p to 170p ahead of the trading update. On Friday the company was trading at 144.8p.

Analysts were also bullish about the retailer following its latest trading update last month, despite it saying it expects to post significant annual losses.

Dixons Carphone said it was in line with previous forecasts to post losses of £90 million in the UK and Ireland this year, after a pre-tax loss of £86 million for the half year to October.

In December, chief executive Alex Baldock said the mobile sector continued to be “challenging”, but said he expects its mobile division to break even by 2022.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said the company was “still in the midst of a reboot” but highlighted its confidence for a gradual recovery.

The latest update will also come a fortnight after the retailer was slapped with a £500,000 fine over a computer hack which compromised the personal information of at least 14 million people.

The Information Commissioner’s Office (ICO) found that hackers were able to access the names, postcodes, email addresses and failed credit checks of millions.

Dixons Carphone apologised to customers impacted, but said it had “no confirmed evidence of any customers suffering fraud or financial loss as a result”.