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Loss of market share means ‘more pain’ for Currys PC World owner | Business News



The company behind Carphone Warehouse and Currys PC World has warned its UK mobile division will remain “significantly loss-making” this year.

Shares fell 27% at the market open after Dixons Carphone used the publication of its full-year results to tell investors it would take time for plans to transform the business to deliver value.

The annual figures were announced against a backdrop of a half-year loss of £440m – reflecting a £490m writedown in the value of its Carphone Warehouse operations.

It divulged a statutory loss before tax of £259m for the year to 27 April as a result, compared with a profit of £289m in the previous 12 months.

Dixons Carphone owns Currys PC World and Carphone Warehouse
The electricals operation is currently the main contributor to profits

Included was a £20m bill for a 2017 data breach – not discovered until 2018 – that affected millions of customers.

The company’s headline profit measure, which better reflects day-to-day trading, came in at £298m – a fall of 22%.

Dixons Carphone guided that the headline figure was likely to dip further in the current financial year, towards £210m, as it gets to grips with challenges including the loss of market share in its mobile operations.

It has been badly hit by the trend of customers holding on to costly mobile handsets for longer at a time of already weak consumer confidence in its core UK market that has hit the retail sector as a whole.

But it has also complained that the division has been held back by its contracts with network partners – agreements that have restricted its offering on price and handset choice.

Dixons Carphone said it was accelerating its turnaround efforts through further negotiations with network operators and integrating its more successful electricals and mobile businesses into one entity.

Other work includes investment in online and bolstering customer service.

But it warned this extra effort would come at a cost.

Chief executive Alex Baldock said: “This means taking more pain in the coming year, when mobile will make a significant loss.

“But accelerating our transformation provides certainty that this year is the trough, as during next year the legacy contractual constraints on our mobile business lift, and the integration cost benefits build.

“We expect mobile will at least break even within two years, and beyond that, equipped with a stronger and unconstrained offer, we will of course aim to do better. In any case, cash generation from mobile will be strong.”

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