Shares of Dixons Carphone (DC.L), a European mobile phone and electrical goods retailer, plummeted after the company cut its dividend in fiscal 2019 and forecast a “significant” loss for the UK Mobile business in the financial year currently underway.
Sales fell by 1% to 10.43 billion pounds ($13.14 billion) during the 12 months that ended April 27, from 10.53 billion pounds a year ago, mainly due to lower UK & Ireland mobile sales, the London-based firm, which has more than 42,000 employees across eight countries, said in its earnings statement.
Group headline profit before tax slid to 298 million pounds from 382 million pounds a year earlier. However, on a statutory basis, Dixons reported a loss before tax of 259 million pounds versus a profit of 289 million pounds a year ago, primarily on the back of non-cash impairments relating to the “changing UK mobile market.”
The company said it had renegotiated all legacy network contracts and was developing a new customer offer as it accelerated the integration of the UK & Ireland mobile and electricals units — which account for almost two-thirds of the group turnover — into one business.
“This means taking more pain in the coming year, when Mobile will make a significant loss,” Alex Baldock, chief executive officer, said. “But accelerating our transformation provides certainty that this year is the trough, as during next year the legacy contractual constraints on our Mobile business lift, and the integration cost benefits build. We expect Mobile will at least break even within two years.”
As a result, Dixons set out a dividend of 6.75 pence for fiscal 2019, compared with 11.25 pence per share it paid out in the prior year.
“Overall, with investment in our transformation underpinning UK & Ireland electricals and International growth in sales and headline profit, and accelerating the changes in Mobile, we’re confident to bring forward our long-term ambitions,” Baldock added.