Dixons Carphone expected to take consumer spend hit

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Dixons Carphone figures

Dixons Carphone is set to reveal slowing profit growth amid its full-year results next Wednesday, as declining consumer spend begins to bite.

Analysts expect the electricals retailer to see post a nine per cent jump in profits to roughly £487.5 million. This compares to a double-digit growth of 17 per cent a year earlier.

Group revenue is expected to see a slight boost, rising from £9.7 billion in 2016 to around £10.5 billion.

“Retailers in the UK have begun to report poor trading updates and express caution about their prospects going forward,” analyst at The Share Centre Graham Spooner said.

“This may be the case with Dixons as the UK consumer feels the squeeze on real incomes from rising inflation through higher import costs and modest wage rises.

“Consumers were in buoyant moods during much of 2016 and the early part of 2017 and the trading update in May suggested that full year profits should be in the range of £485 million to £490 million.”

Household spend has hit its lowest growth in three years and inflation its highest in four years. This will impact the whole retail industry, but big ticket electrical items are likely to be among the worst hit.

The retailer‘s chief executive Seb James stated at the start of the year that Dixons Carphone was well positioned to handle an economic slowdown.

A recent partnership with Tesco was announced this month, whereby the grocer will trial Dixons Carphone‘s Curry‘s PC World store-in-stores.

Dixons Carphone‘s UK and Ireland chief executive Katie Bickerstaffe said: “Customers tell us they want to pick up the latest electrical products conveniently and at competitive prices, with expert advice and from someone they trust to keep them working seamlessly.

“This trial gives them all of this during a weekly grocery shop, which we hope they will enjoy.”