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Dixons Carphone is swimming upstream

The electrical vendor's full-year returns may prove atypical to the wider retail market
June 28, 2017

Dixons Carphone (DC.) revealed record headline profits for its April year-end, eliciting a predictably excitable reaction from a media preoccupied with a slump in consumer confidence - real or imagined. Admittedly, management's modestly upbeat assessment was certainly at odds with recent reports from department store retailer Debenhams (DEB) and sofa chain DFS (DFS), but we needn't get too carried away even if the electricals segment is viewed as a bellwether for the wider retail market. After all, even as industry analysts were busy digesting Dixons' figures, Bank of England governor Mark Carney was warning on the unsustainable growth of consumer credit in relation to household income.

IC TIP: Hold at 297.4p

We shouldn't be too churlish, though. Like-for-like revenue in the core UK & Ireland segment was up 4 per cent, mirroring increased market share in consumer electronics, white goods, gaming and computing, although margins for the mobile market contracted due to safety and supply issues, along with delayed launches of new handsets. Still, the group turned in adjusted net earnings of £389m, a 12 per cent improvement on the prior year.

Liberum expects adjusted profits of £515m for the April 2018 year-end, giving EPS of 33.4p, up from £486m and 31.5p in FY2017.

 

DIXONS CARPHONE (DC.)
ORD PRICE:297pMARKET VALUE:£3.43bn
TOUCH:297-298p12-MONTH HIGH:391pLOW: 276p
DIVIDEND YIELD:3.8%PE RATIO:12
NET ASSET VALUE:265p*NET DEBT:9%

 

 

Year to 29 AprTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2014 †1.9477.010.46.00
2015 **8.2628722.08.50
20169.7426315.69.75
201710.5938625.311.25
% change+9+47+62+15

Ex-div: 24 Aug

Payment: 22 Sep

*Includes intangible assets of £3.66bn, or 318p a share **13-month period. † 29 March year-end