Dixons Carphone (DC.) has been working to adapt its UK electricals business to the changing retail environment, building its online offering to counterbalance difficult trading in high street stores. Management says the group is on track, but the half-year numbers indicate it is still in the painful early stages of an attempted turnaround.
Investments in high-growth categories such as large-screen TVs have dented adjusted profits, with the related gross margin halving to a painfully thin 0.36 per cent. Inventory and receivables as a proportion of sales were broadly constant from the 2018 half-year. Online sales grew 12 per cent year on year, helped by investments in user experience on the website. Management said that the retailer had grown market share for electricals across all territories, but that's cold comfort if you're booking unit losses.
Attempts to turn around the ailing mobile phone division are still under way. Management says it is “the most important category for us, it is our largest, and the most important product to customers”, but it has been caught flat-footed by the shift to sim-only and variable contracts - a rapidly changing product lines requires flexibility. The division is loss-making and saw like-for-likes fall by a tenth in the period. A new offering is due to be ready for launch in the first half of the next year.
Bloomberg consensus forecasts adjusted EPS of 14p for the full year, down from 20.2p in FY2019
| DIXONS CARPHONE (DC.) | ||||
| ORD PRICE: | 141p | MARKET VALUE: | £ 1.64bn | |
| TOUCH: | 140.75-141p | 12-MONTH HIGH: | 156p | LOW: 90p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 209p* | NET DEBT**: | 12% | |
| Half-year to 26 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 4.89 | -440 | -39.7 | 2.25 |
| 2019 | 4.71 | -86.0 | -6.0 | 2.25 |
| % change | -4 | - | - | |
| Ex-div: | 24 Dec | |||
| Payment: | 24 Jan | |||
| *Includes intangible assets of £3.3bn, or 284p a share **Does not include IFRS 16 lease liabilities of £1.3bn | ||||
