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Dixons Carphone warns it may close stores

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Uncertain times

DIXONS Carphone has warned it could close stores after revealing a collapse in half-year profit.

The retailer said pre-tax profit for the 26 weeks to October 28 fell by 60 per cent to £61 million.

Although total sales were up three per cent, sales at its mobile phone division were down by the same figure.

The company said it would become a “simpler, less capital-intensive business”.

Chief executive Seb James said: “We have a high cost base and we need to address that, and we always look at our store estate. We do need to update ourselves.”

The company has stores across Sussex, including Eastbourne, Worthing and Brighton.

Jeff Bray, senior lecturer in marketing and retail management at Bournemouth University, said the chain had been squeezed by online competitors.

He said: “It’s very important for Dixons Carphone to be able to compete on price but competing on price when your costs inevitably are significantly higher has become incredibly difficult.

“There are probably increasing numbers of customers using Dixons Carphone stores as showrooms.

“Even while they’re in the store they will use their mobile phone to find a cheaper price and buy it.”

He said people were hanging on to computers and mobile phones for longer.

He said: “Certainly in the technology sector we’ve seen some replacement cycles get longer as the technology gets better.

“Typically, an office that replaced computers every three years or so can now do it every six or eight years, simply because you don’t need to replace so often and don’t get upgraded.”

He said advances between different generations of mobile phones and tablets had become less dramatic.

“Often, the benefits of having the new model have become smaller because the technology’s better.”

Neil Wilson, senior market analyst at ETX Capital, said: “With over 700 Carphone stores in a total estate in excess of 1,000 across the group, there is ample opportunity to rationalise the Carphone estate and improve profitability in mobile while still retaining a dominant market position.”

A company spokesman insisted that there are currently “no store restructuring plans.”


Source: The Argus