Dixons Carphone warned the Covid-19 pandemic would delay the return of its mobile phone business to profitability and that economic uncertainty meant it could not forecast performance in its electricals division.
The mobile phones unit made a worse than expected £104m loss before exceptional items in the year to May 2 and would perform “slightly” worse than forecast in the current year. The business, which is being restructured, would not break even until six to 12 months later than previously anticipated.
Dixons said the mobile business had a much smaller share of revenue from online operations and so had not seen the same sales transfer to online as electricals during lockdown.
“Our new mobile offer will reflect how customers are buying phones and technology . . . but this has also been delayed as we paused system development during the crisis,” the company said.
Dixons had already decided to close all 531 standalone Carphone Warehouse stores before lockdown was imposed but the subsequent enforced closure of Carphone stores within its larger Currys outlets hurt sales.
The company had previously said the mobiles business, which had suffered from onerous volume-based agreements with the mobile networks and changes in consumer behaviour, would generate about £200m of cash by May 2024. It now expected that figure to be between £125m and £175m.
Same-store sales in the UK electricals business grew 1 per cent and profit fell 10 per cent, almost all due to the impact of coronavirus-related store closures. Sales in Greece and the Nordics, where stores remained open during the pandemic, grew 4 per cent and profit rose 8 per cent.
Alex Baldock, chief executive, said electricals sales since May had continued to grow year on year, with a strong rise online. He added that the company expected “a weakening of consumer spending later this year” and was planning cautiously for a variety of economic outcomes.