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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. |
| The shares plunged more than 30% to 161p, which means their value has more than halved this year. | |
| In an unscheduled trading statement, the company said it now expects profits in the range of £360 to £440m this year, down from £501m last year. Analysts had been forecasting annual profits of £495m. The downgrade comes despite 6% growth in like-for-like sales in the first quarter ending in July. | |
| 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”. | 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. | 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 profit warning raised fresh concerns over the health of Britain’s high street retailers. The UK’s two biggest home improvement chains, Kingfisher and Homebase, last week reported falling sales, partly due to wet weather. Sir Martin Sorrell, chief executive of WPP, the world’s largest advertising group, this week warned of a global economic slowdown. | |
| Dixons – 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. | 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. |
| Broker Exane BNP Paribas had already downgraded Dixons to “underperform” earlier this month, pointing to new competitors such as BT and Sky. |