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Black Friday is here to stay in UK, says Dixons Carphone Black Friday is here to stay in UK, says Dixons Carphone
(about 7 hours later)
Dixons Carphone has declared that Black Friday is here to stay after the US-inspired discount day helped boost expected annual profits beyond forecasts. Dixons Carphone will step up its activity around Black Friday this year as boss Seb James said the US-inspired discount day played to the electrical retailer’s strengths and expanded Christmas sales.
In an update on Christmas sales, Dixons Carphone said a surge in demand on Black Friday had turned festive trading into a rollercoaster. Some retailers, including John Lewis, have said the 24-hour bargain spree on the last Friday of November needs to be reined in to restore order to pre-Christmas trading. Dixons Carphone’s finance director, Humphrey Singer, said the frenzy on the day took the company by surprise but that it was now a fact of retailing life. James said profits for the group, which owns the Currys and PC World chains, would be ahead of expectations after what he called a “Bactrian camel” festive season – with the two humps of Black Friday and Boxing Day.
“It was bigger than anybody expected but that’s just the way it is. I think it’s here to stay,” he said. “It’s one of those phenomena we have imported from our American cousins that we need to plan for and get used to.” Sales at established stores rose 7% as the group increased market share in the UK & Ireland and also did well in Norway, Denmark and Sweden. The company, which finalised a £3.7bn merger last year, now expects to make annual profits of between £355m and £375m – up from £354m anticipated by analysts.
Like other retailers, Dixons Carphone said Black Friday distorted Christmas trading by creating a spike in sales as shoppers snapped up discounted goods early. Fights broke out at some shops and retailers’ websites, including Dixons Carphone’s Currys, creaked under the strain. Dixons Carphone said it had enjoyed record trading on Boxing Day as well as enjoying its biggest sales day ever on Black Friday as shoppers snapped up ultra-high-definition TVs, coffee machines and juicers as well as electronic fitness bands, sales of which were up 13 times on Christmas 2013.
Singer said: “Overall, Christmas trading was strong with an exceptional Black Friday weekend. It was bigger than Boxing Day though Boxing Day was a record day. It was a bit quiet in the two or three weeks after Black Friday but that enabled us to restock to make sure we had more available for the last weekend before Christmas.” “We have changed from a dromedary which has one hump to a Bactrian camel which has two humps. That’s the way we are going to trade from now on in the UK,” said James.
The newly-merged retailer, created when Carphone Warehouse and Dixons joined together last year, said sales for the two months to 3 January at stores open a year or more rose 7%. As a result, pre-tax profit for the year ending 1 May will be between £355m and £375m, compared with analysts’ average forecast of £355m. While other retailers, including Argos’s owner Home Retail Group and John Lewis, complained that Black Friday was not good for business, James said Dixons was able to protect its margins and those of its suppliers by ordering large amounts of stock for the promotional day months in advance. “Because we have got a lot of scale we have the luxury of being able to plan ahead for set-piece promotions that really suit us,” he said.
Sebastian James, the company’s chief executive, said: “The strange shape of this year’s Christmas trading was something of a rollercoaster but I am very pleased with the end result.” He said Black Friday was “here to stay” and that many people now took the day off to go shopping. “How many more years before it’s declared a national holiday? We’ll see,” he said.
Dixons Carphone benefited from the collapse of rival Phones 4u and the launch of the iPhone 6, Singer said. Other popular items were large TVs, whose sales more than doubled, coffee machines, juicers and high-speed blenders.
The retailer’s shares rose 1.8% to 450p in early trading.