Shares in Dixons Carphone (DC) plunged by a tenth after the retailer said it would cut the full-year dividend by around 40 per cent, and that it had swung into the red at the half-year stage – despite a 2 per cent rise in like-for-like revenues.
The half-year dividend was reduced from 3.5p to 2.25p. Management has rebased the payout for 2018-19 to three times earnings cover, with a view to growing dividends from this level. To the latter point, pre-tax losses stemmed from a whopping £490m in charges, though they largely related to non-cash impairments. Indeed, Dixons recorded a £225m impairment over the goodwill of its UK and Ireland mobile business, together with a £113m impairment of related assets and onerous lease charges of £6m against individual stores.
Meanwhile, among other dampeners, regulatory charges came in at £57m, while the data breach revealed in June resulted in costs of £17m. Dixons now expects exceptional costs of £100m for 2018-19, against earlier guidance of around £30m. Still, other guidance remains intact – including the expectation of £300m in “headline” pre-tax profits. Management says its transformation plan is under way, and it has identified £200m in gross cost savings along with an additional £200m of capital expenditure over three years.
According to Bloomberg, analysts expect adjusted EPS of 20.3p for the 2019 financial year (from 26.1p in FY2018)
DIXONS CARPHONE (DC) | ||||
ORD PRICE: | 138.9p | MARKET VALUE: | £ 1.61bn | |
TOUCH: | 138.7-139p | 12-MONTH HIGH: | 236p | LOW: 125p |
DIVIDEND YIELD: | 7.2% | PE RATIO: | na | |
NET ASSET VALUE: | 224p* | NET DEBT: | 11% |
Half-year to 27 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2017 | 4.87 | 54.0 | 4.5 | 3.5 |
2018 | 4.89 | -440 | -39.7 | 2.25 |
% change | +0.5 | - | - | -36 |
Ex-div: | 27 Dec | |||
Payment: | 25 Jan | |||
*Includes intangible assets of £3.3bn, or 285p a share |