15 Jul 2020
Posted in Retail
Strong online performance not enough to push Dixons Carphone into positive territory
Following today’s release of Dixons Carphone FY figures for 2019/20,
Zoe Mills, Retail Analyst at GlobalData, a leading data and analytics company, comments:
‘‘Despite a strong performance online, Dixons Carphone’s mobile phone arm held back its performance with both group sales and profit witnessing a notable decline. Its results continue to be polarised with UK & Ireland electricals sales rising to reach £4,538m in FY2019/20, while its mobile fascia experienced greater deterioration in revenue dropping £409m to £1,589m. This dire performance within mobile is unlikely to improve any time soon, following Dixons Carphone’s announcement in March of 531 Carphone Warehouse stores closing, reducing its sales opportunities given its more limited reach in physical locations.
Online sales rose 10% in the 47 weeks to 21 March, indicating that before the closure of physical stores as the UK went into lockdown, its online electrical sales had already been on track for a strong year, driven by its investment in online and the introduction of a transactional mobile app. CEO Alex Baldock’s experience at The Very Group is in some part responsible for this with an increased focus on financing options available online encouraging customers to spend. In the five weeks to 25 April, Dixons Carphone’s online sales accelerated (+166%) driven by the closure of all non-essential stores. This performance, while impressive, was not able to negate its loss of sales from its stores with overall electrical sales down 16% for the same period. Its results are also weaker than those reported by AO World yesterday for the 12 months ending 31 March 2020, with the online pureplay’s total UK revenue growing 20.3% (including sales from Mobile Phones Direct), as Dixons Carphone’s performance was ultimately dampened by both its physical stores and mobile sales.
It will be a long road to recovery for Dixons Carphone, with its mobile proposition set to be a drain on profitability for the next two years. And as non-essential stores open, the welcome boost in online spend that it has seen over the past couple of months, will be difficult to maintain. But its investment in this channel, such as with its ShopLive services that allowed its customers to connect with store staff from home, has been the right move to differentiate itself from competitors AO and Amazon.”