Dixons Carphone still counting cost of miserly mobile phone sales

Things are, er, looking up though: activist investor Elliott Management is reportedly sniffing around retailer

Distressed retailer Dixons Carphone – reportedly the object of activist investor Elliot Management's affections – today confirmed a 7 per cent tumble in mobile phone sales over the festive period.

In a trading update to the London Stock Exchange this morning, Dixons reported flat sales for the 10 weeks ended 7 January as gains in TVs, Smart Tech and gaming just offset weak handset shipments.

UK and Ireland consumer electronics were up 2 per cent, "despite a challenging backdrop and a declining market", said group CEO Alex Baldock. Dixons claimed it took market share from both online and bricks-and-mortar rivals to maintain its position.

Dixons added that mobile phone sales came in "as expected". This isn't a new problem for DixCar: mobile phone sales slumped in fiscal '18 ended last summer, forcing the retailer to issue a profit warning, close 92 stores and ultimately led to a write down of goodwill equating to hundreds of millions of pounds.

There is a get-fit plan from management to turn those losses into profits but with its share price down 32 per cent in the year to date, the company is perhaps seen as ripe for the plucking by Elliott Management, which already owns stakes in Micro Focus, Citrix and others.

According to a report by Sky yesterday, the bolshy investor has started a detailed analysis of Dixons Carphone's accounts but has yet to buy a big stake, which is not assured.

The logic, according to some quoted, is that Elliot may build a significant shareholding and agitate to sell off the International subsidiary and "effectively own the UK business for free". Elliott does also own entire businesses including Waterstones and Travelport.

The International subsidiary was one of the brighter spots for DixCar in its trading update, growing 5 per cent year-on-year. Trading in the Nordics – particularly Sweden and Denmark – were called out and ops in Greece were also said to be very strong.

Elliott Management refused to comment. Dixons Carphone has yet to reply. ®

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