If ever there was a good time to release bad news, it is today. As luck would have it, Dixons Carphone has filed a set of crappy half-year financials that show the extent of the damage that its loss-making mobile business is wreaking.
Group revenue for the six months ended 26 October declined 4 per cent year-on-year to £4.713bn, with the downward pressure caused by operations in the UK and Ireland – where Electricals slipped 1 per cent to £1.979bn and Mobile was down 18 per cent to £830m. Business in the Nordics was flat at £1.677bn and up 7 per cent in Greece to £227m.
Declines have been more marked in the second half of the year, indicating choppier waters ahead. And that's before the UK's withdrawal from the EU has begun.
Chief exec Alex Baldock is trying to manage an industry-wide slowdown in mobile handsets sales – a market that saw Apple's iPhone sales shrink by $22bn in its fiscal '19 – by cutting costs and trying to improve services.
He said this morning that Dixons Carphone had captured some market share from rival electricals retailers, and "planned investments in the colleague and customer experience have played a big part in this resilient performance."
Clearly the London Stock Exchange agrees, and the corporation's share price was up by almost 6 per cent at the time of writing.
Actions already undertaken or in process include closing 92 Carphone stores, renegotiating legacy network contracts, accelerating the integration of Dixons and Carphone, and moving the group onto a single ERP platform. Actions to bolster employee engagement have included giving the 30,000 workers £1,000 worth of shares.
A chief digital officer, Mark Allsop, and a chief information officer, Andy Gamble, are set to join the company in January.
Dixons is also trying to beef up its share of online retail, overhaul credit services – they were up 8 per cent in the half-year – and trying to do something that all vendors repeatedly do: make it itself easier to do business with.
"We've taken great strides in our transformation," the CEO claimed.
The Mobile business is expected to be loss-making until 2022 when it is forecast to break even. That said, analysts have some expectations that 5G networks and devices will be a boon for the smartphone industry next year.
On the integration of Carphone, Dixons said it is on track to save £200m in costs by FY '22 by "improving and removing duplication in IT, Supply Chain and Central costs".
Dixons reported a group statuary loss before tax of £86m, versus a loss of £440m a year ago that was caused mostly by a goodwill writedown. ®