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Dixons Carphone set to join FTSE 100

As Dixons Carphone gears up to join the elite FTSE 100 club, chief executive Sebastian James says he's confident of the group's prospects as a combined entity
September 12, 2014

"This is our first solo flight in our merged entity and we look to be in extremely good shape," Sebastian James, chief executive of newly created Dixons Carphone (DC.) said as he announced the group’s first-quarter results.

As Dixons Carphone prepares to join the heavy hitters of the FTSE 100, it’s not hard to see why Mr James is so upbeat about the group's prospects. Not only will the merger lead to cost-savings, but joining up Dixons' electricals expertise with the mobile connectivity provided by Carphone Warehouse, means it can offer customers a complete, seamless end-to-end digital service. That's important because the way we use the internet on our mobile devices is changing. Increasingly, mobile technology is becoming woven into our daily routines: televisions are now connected to the internet, lighting can be controlled through apps, fridges are mobile-ready and even thermostats can be controlled in the palm of our hands. Indeed smart technology is a big focus for the new Dixons Carphone. The category was launched in the last quarter and will be fully rolled out in stores by Christmas.

Shareholders will be pleased to know that integration appears to be going to plan, too. There are already 11 stores-in-store, performing ahead of expectations, and the group is on track to deliver 30 by Christmas. Seven departments have also been combined across the business. As for Dixons, it reported strong growth in the UK and Ireland in the three months to 31 July, with like-for-like sales up 4 per cent. White goods sold particularly well, helped in part by the housing recovery. Mr James said Dixons had sharpened its pricing to match online-only competitors and had gained market share. 'Posher products' sold well too, such as range-style cookers, which were up 64 per cent compared with pre-recession levels. Strong television sales continued over the summer, with consumers opting for bigger, ultra high-definition sets, hoping to future-proof their purchases. Dixons also sold enough wearable devices to "track 6.5m customer steps". Elsewhere, the Nordics delivered a solid performance, against tough comparatives and Mr James said the Greek business would return to profitability "in the near future".

As for Carphone, like-for-like sales fell 6 per cent in the four months to 2 August, but Mr James stressed that this was a good result given last year's extremely tough comparisons, when sales were up 13 per cent, thanks to a massive iPhone promotion. “There is no way on earth we could have beaten those numbers,” he added. Total sales fell 14 per cent as Carphone pulled out of low-margin handset wholesale business in Germany.