The boss of Dixons Carphone said there is still a “ton of strength” in the embattled retailer despite reporting a slump in profits and being hit by a massive data breach.
Chief executive Alex Baldock said he had received a “lively induction” since joining two months ago, but was now “more confident in the long-term prospects” of the business.
Profit before tax at Britain’s biggest electricals retailer slipped 28pc to £289m in the year to April 28, despite a 3pc rise in revenues to £10.5bn, as it battled weaker mobile phone and computer markets and higher costs.
Mr Baldock said the company had strong market positions and there was opportunity to provide a “clearer direction and a sharper focus” on its core operations.
He added: “You might say that it has been a lively induction, but I am sitting here more confident in our long-term prospects than the day I bit the chairman’s arm off when the job came up.”
Three weeks ago, Mr Baldock was forced to warn that profits would fall again this year as demand for electricals continues to shrink and the company spends more on customer service to make up for what he said was a failure to invest by his predecessor Sebastian James. He also plans to shut 92 branches of Carphone Warehouse.
Last year’s profits suffered as customer spending shifted from computers to lower-margin consumer electronics and white goods. That was exacerbated by a rise in costly home delivery as more customers shopped online, and a tough mobile phone market.
Mr Baldock said the electricals business was resilient and was still growing market share despite facing a squeeze on margins.
However, he said the mobile phone arm in the UK was “barely profitable” and was having to adapt to more customers wanting to buy a contract without a phone, or purchase a handset outright.
He said the company planned to respond by “beefing up” its credit offer so more customers can afford to buy the expensive handsets.
Dixons Carphone revealed last week that 5.9 million customer bank card details and 1.2 million personal data records had been accessed by hackers.
The breach is believed to have been caused by an advanced computer virus – or malware – which penetrated processing systems of Currys PC World and Dixons Travel stores.
Around 5.8 million payment cards hit by the attack were protected by chip-and-pin, according to the retailer, while 105,000 cards outside the EU without chip-and-pin were compromised.
The hack happened in July last year, but was only discovered last week following a review of the company’s systems.
Mr Baldock said there was still no evidence to suggest the compromised data had been fraudulently used.
George Salmon, equity analyst at Hargreaves Lansdown, said plans to close 92 Carphone Warehouse stores and step up investment in its remaining estate “made sense”.
However, he said “the scale of the challenges in front of Dixons means there’s more work to be done before profits start moving in the right direction again.”