Dixons Carphone issues profit warning as cost of mobile phones soar

Dixons Carphone

Dixons Carphone has issued a profit warning in its first quarter update as sales of mobile phones decline thanks to rising prices incurred from the Brexit-induced collapse of the pound.

In an unscheduled trading update for the 13 week period to July 29, the technology giant bemoaned “challenging conditions in the UK mobile phone market”.

Dixons Carphone — which owns and operates retail chains Currys, PC World and Carphone Warehouse in the UK and several other brands in Scandinavia and Greece — now expects headline pre-tax profit for the full year to be in the range of £360 million to £440 million.

This is a significant drop from analyst predictions of between £460 million and £485 million and well below the £501 million forecast last year.

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“Over the last few months we have seen a more challenging UK post-pay mobile phone market,” chief executive Seb James said.

“Currency fluctuations have meant that handsets have become more expensive whilst technical innovation has been more incremental.

“As a consequence, we have seen an increased number of people hold on to their phones for longer, and while it is too early to say whether important upcoming handset launches or the natural life cycle of phones will reverse this trend, we now believe it is prudent to plan on the basis that the overall market demand will not correct itself this year.”

READ MORE:  Dixons Carphone posts double digit growth

The company also said it would take a £10 million to £40 million hit from changes to EU roaming legislation, which will see mobile phone retailers now miss out on the cut of additional charges levied by telecoms firms.

Nonetheless, Dixon Carphone’s said its UK like-for-like sales were up four per cent in the period, while total sales rose one per cent.

Meanwhile, overall sales were up six per cent.

In its annual report for the year to April 29, the group reported a 10 per cent jump in pre-tax profits to £501 million, compared to £457 million a year prior.

Bottom line pre-tax profits also skyrocketed 47 per cent as group like-for-likes jumped four per cent.

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