‘Clerical error’ wipes out Dixons Carphone’s sales growth
Dixons Carphone was left red-faced today as it admitted that its sales growth figure actually represented a decline.
The retailer updated the stock market on its Christmas trading figures this morning, telling investors it had enjoyed a two per cent rise in reported sales.
However, six hours on Dixons Carphone reversed the number into a two per cent drop, blaming a “clerical error”.
The update hurt the company’s four per cent share price gain from earlier, leaving its stock up just 2.3 per cent at 145.7p.
Dixons Carphone stuck to the rest of its numbers after revealing the inaccuracy. Mobile revenue fell nine per cent in the 10 weeks to 4 January, as it had guided towards.
Electricals revenue rose two per cent on a like-for-like basis as people bought oversized TVs from the retailer, which also sold 8,000 smart speakers per day over Christmas.
“Due to a clerical error, the previous version of the announcement showed Group Reported sales growth as ‘2%’, the correct growth is now shown as ‘-2%’,” Dixons Carphone said this afternoon.
“All other details including group local currency and like-for-like sales growth remain unchanged.”
Dixons Carphone said it had outperformed the average electricals market decline of three per cent.
International like-for-like revenue rose three per cent, with the Nordics and Greece growing three per cent and six per cent respectively.
But overall Dixons Carphone’s international sales slipped one per cent, as they did in the Nordics.
Overall, UK & Ireland online-in-store sales rose 140 per cent and Dixons Carphone stuck to its full-year guidance.
Chief executive Alex Baldock said:
We’ve had a good peak in a weak UK market and we’re on track to deliver what we promised for this year, and with our longer-term transformation.
Peak saw us continue to invest in our strategic initiatives with encouraging results. Credit and services adoption rates increased, online sales grew strongly, and our newly remodelled stores performed well. Coupled with our unambiguous price promise, alongside better availability and delivery, this led to big improvements in customer satisfaction and strong market share gains in electricals.
Electrics spark hope as mobile loses signal
Shares stayed in the green despite Dixons’ U-turn on growth, with analysts still finding plenty to be positive about in the retailer’s trading update.
Richard Lim, chief executive of research firm Retail Economics, said that Dixons Carphone’s electricals business helped it produce some “solid” numbers for investors.
“Wider structural changes in the mobile market continued to undermine growth as consumers opted for SIM-only deals while hanging on to their handset for longer,” he added.
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“A sharp drop in sales was widely expected but remains a challenge for the retailer as they continue to reshape the business and offer a more connected in-store experience.”
AJ Bell investment director Russ Mould agreed, adding: “Plus the like-for-like numbers are not affected … and the bar for expectations is still fairly low.”
Mould added that Dixons will continue to struggle with its mobile division, saying: “The nation seems happy to load up on giant TVs and buy the latest gadgets but there isn’t much excitement about having the latest handset. People are holding on to their phones for longer, which has been a growing problem for Dixons which relies on people upgrading handsets on a frequent basis.”
Baldock told media today that he hopes to turn around the mobile division by the 2022 financial year. “We are nowhere near the full potential of this business,” he added, saying he would spend 2021 integrating Dixons and Carphone more effectively.
A turnaround in UK house prices may help Dixons as new home owners buy TVs, while today’s new record employment rate could also help boost consumer spending, Mould continued.
“While that hasn’t yet been reflected in retail sales figures, some clarity on how Brexit might play out could be the boost desperately needed by the nation’s shopkeepers,” Mould said.
Online vs stores
Julie Palmer, partner at Begbies Traynor, said the flat Christmas period’s sales will have upped the pressure on chief executive Baldock, however.
“The company has started to focus on its online offering with the recent appointment of two new digital executives,” she said.
“The company’s physical presence remains crucial to future success, and with a shrewd 30 per cent average reduction in rent costs across its stores, it will go some way to easing the challenges the electrical retailer faces.”
“While the retail sector continues to struggle and the purchasing of major white goods remains weak, Baldcock will face an uphill battle.”
Dixons Carphone sticks to price promise
Dixons Carphone told media it was committed to its new price promise to match retailers online or in-store.
“We think it’s important for a market leader like us that’s a specialist in technology that customers trust us on price,” Baldock said, when asked about the commitment after John Lewis’ price guarantee hurt the department store chain.
“Over time we expect competitors to realise there’s not much future for them in taking us on [on price] due to our size. We need to stand behind our price promise and that’s what we’ll do.”
Retail Economics’ Lim said: “Their price promise to match any retailer, online or in-store, resonated well with constantly connected shoppers who readily browse their smartphones in-store to checkout online offers.
“Assurances on price are particularly important in an extremely competitive sector where the nature of the product makes it difficult to differentiate from online competitors.”