Carphone Warehouse announces 92 store closures but remains bullish about future

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Electricals and mobile retailer Carphone Warehouse has announced that it is set to close 92 of its stores this year, but the business remains optimistic after its latest figures.

Full year Group revenue was reported to be up 3% year-on-year, with like-for-like up 4. In the UK & Ireland full year like-for-like revenue was up 2% (4Q up 1%), with the strongest growth coming internationally, with Nordics like-for-like full year revenue up 9% and Greece up 11%.

Group chief executive Alex Baldock commented: “Eight weeks in the business have cemented my optimism about Dixons Carphone’s long-term prospects. I’ve found exceptional strengths, and though there’s plenty to fix, it’s all fixable. We’re number one in each of our markets, with people and capability no competitor can match. Our opportunity lies in making the most of those strengths, which we are nowhere near doing. And we must: nobody is happy with our performance today.

“We’re getting on with it, through a new leadership team and structure that’s promoted top talent, cleared away unnecessary layers and silos, and started to speed up decision-making. We’re already giving new impetus to areas crucial to our transformation such as data and analytics, marketing, digital, services and technology. And we’re working at pace to bring clear long-term direction to the business.”

He added: “Right now, with our international business in good shape, we’re focusing early action on the UK. In electricals, we’re focused on gross margin recovery. In mobile, we’re stabilising our performance through improvements to our proposition and network agreements. In both, we’ll work hard to improve our cost efficiency.

“I’ve been struck since my first day by the commitment and know-how of so many of my colleagues, by the breadth and depth of our multichannel capability, by the sheer energy we can release here. Equally I’ve been struck by the strength of our market position, of our appeal to customers.

“There’s so much more to come from Dixons Carphone, though plenty of hard work lies ahead. I look forward to giving you more of my initial thoughts at our full year results in June, and a fuller update on our plans and progress in December.”

The report also looked ahead to 2018/19, and noted: “As in 2017/18, we are budgeting for a contraction in the UK electricals market and will use our scale to maintain our market share. We expect some cost increases in UK electricals, notably National Living Wage and IT depreciation, partially offset by gross margin recovery initiatives, including range optimisation, better availability and reduced levels of markdown.

“Overall, gross margins are expected to be down, partially offset by cost initiatives. We have taken early action here with the planned closure of 92 Carphone Warehouse standalone stores this year.”

The statement added: “We expect Group headline PBT for 2018/19 to be around £300m and we currently anticipate a similar level of free cashflow conversion versus the prior year.”

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