Dixons Carphone shares plunge further as hefty loss rattles investors
Shares in Dixons Carphone dropped more than eight per cent this morning as investors reel from its disastrous full-year results.
Read more: What’s wrong at Dixons Carphone? Analysts react to loss as shares dive
The retailer yesterday revealed it had swung to a £259m loss, driven by poor trading in its mobile division, and warned shareholders of “more pain” to come.
The mobile phone and electrical retailer said pre-tax profit for 2020 would be £210m, far below forecasts of £300m, prompting its largest one-day share price drop since 2017.
Chief executive Alex Baldock warned the firm’s mobile division would be “significantly loss-making”.
But he unveiled plans to restructure the mobile arm to boost cash generation, with the aim of breaking even by 2021.
Ken Odeluga, market analyst at City Index, described the results as “ugly”.
“It’s an echo of issues that emerged around two years ago tied to consumers upgrading handsets less often and shifting to cheaper contracts,” he said.
Head of markets at interactive investor, Richard Hunter, said the mobile division was “on life support”, draining capital and resource prior to its integration the electricals business.
“The rapidly evolving nature of this segment has threatened to leave Dixons behind and thus, as a matter of urgency, the company has renegotiated its network contracts, although such benefits will take time to wash through,” he said.
Read more: Dixons Carphone swings to loss as CEO warns of “more pain” to come
Despite the stark warnings, boss Baldcock described 2019 as the “trough”, and insisted the transformation plan will pay off in the coming years.