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Dixons Carphone warns on profits as customers keep phones for longer Dixons Carphone warns on profits as customers keep phones for longer
(35 minutes later)
Dixons Carphone has warned of a steep fall in profits this year, as customers hold on to their phones for longer after the weaker pound pushed up the price of new handsets.Dixons Carphone has warned of a steep fall in profits this year, as customers hold on to their phones for longer after the weaker pound pushed up the price of new handsets.
In an unscheduled trading statement, the company said it expects profits in the range of £360 to 440m this year, down from £501m last year. Analysts had on average been forecasting a profit of £495m. The shares plunged by nearly 30% to 166p, which means their value has more than halved this year.
Dixons said the UK mobile phone market had become tougher in the last few months. Due to currency fluctuations – including the sharp fall in the pound since last year’s Brexit vote – handsets have become more expensive, so people are keeping their phones longer before upgrading to a new model. In an unscheduled trading statement, the company said it expects profits in the range of £360 to £440m this year, down from £501m last year. Analysts had been forecasting £495m.
Chief executive Seb James said: “We have seen an increased number of people hold on to their phones for longer and while it is too early to say whether important upcoming handset launches or the natural life cycle of phones will reverse this trend, we now believe it is prudent to plan on the basis that the overall market demand will not correct itself this year.” Dixons said the UK mobile phone market had become tougher in the last few months. Due to the sharp fall in the pound since last year’s Brexit vote, handsets have become more expensive “whilst technical innovation has been more incremental”.
Chief executive Seb James said people were holding on to their phones four to five months longer than previously and this trend was unlikely to change for the rest of this year.
The company – the biggest seller of mobile phones and contracts in the UK – hopes that the launch of Apple’s iPhone 8, expected about 12 September, will bring customers back into its shops.
James said: “Everything we know about the iPhone 8 suggests it will be a popular product, but we are not betting the farm on it.” He expects it to be better than the iPhone 7 and in line with the iPhone 6S, but not as good as the iPhone 6.
The scrapping of EU roaming charges in mid-June will result in a hit of £10m to £40m this year, the group said.The scrapping of EU roaming charges in mid-June will result in a hit of £10m to £40m this year, the group said.
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