Dixons Carphone has warned of a drop in profits in the current financial year as it faces a challenging postpay UK mobile phone market. In a trading statement, the group said it now expects profit before tax of GBP 360-440 million for the year to April 2018, down from GBP 501 million last year.
Group CEO Seb James said that consumers were holding onto their mobile phones longer as technology upgrades become less frequent and currency fluctuations make handsets more expensive. He added that it was sensible to plan on the basis that the overall market would not rebound this year, although the company was confident that the postpay market would return to normal in the long term.
Profits will be hit by a number of one-off effects, such as the sale of the company's Spanish business and lower profits at CWS after the deal with Sprint last year and a shift to a software-as-a-service model. In addition, the retailer sees a negative impact in network costs from the new EU roaming rules, leading to a negative effect of GBP 10-40 million this year versus a positive GBP 71 million last year.
The group saw a 6 percent rise in like-for-like sales in the first quarter to July. UK & Ireland like-for-like sales were up 4 percent, the Nordic markets grew by 8 percent, and Greece was up 6 percent.
The company said it expects profit from its core retail operations this year to be in line with last year. It will continue to invest in its margin and proposition in order to maintain share during the market downturn in the UK, which will also have an impact on profits.
