Dixons Carphone mobile sales keep falling

by Ike Obudulu Posted on January 22nd, 2019

Dixons Carphone has reported a fall in mobile phone sales over the Christmas trading period, as fewer people signed up to two-year contracts.

The electrical goods retailer said sales of mobiles were down 7% in the 10 weeks to 5 January.

The news reflects a growing trend in the phones market after Apple cut its sales forecast earlier this month.

However, Dixons had better fortune in other areas, with strong sales of smart tech, supersize TVs and in gaming.

‘Nasty conditions’
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “It’s easy to attribute Carphone’s woes to the parlous state of the UK High Street, but while that’s certainly not a helpful backdrop, it’s actually dynamics in the mobile phone market which are doing the damage right now.

“Consumers aren’t switching phones as often as they used to, choosing instead to hang on to their old handsets and take out less profitable sim-only contracts.

Overall, the company’s like-for-like revenues were up 1%.

“In pretty nasty conditions, these latest numbers from Dixons Carphone are as good as could be hoped,” Mr Khalaf added.

While mobile sales continued to slide, Dixons enjoyed a jump in sales of “supersize” TVs, which it defines as 65in and above. Sales of that size increased by 70%, while the company sold three times the amount of 75in sets over the peak period from a year earlier.

Sales in gaming – which covers several different elements, including computers, consoles, virtual reality and live gaming areas – jumped by 60%. The company has opened 17 gaming areas in its shops and plans to have 140 by next year.

Dixons chief executive Alex Baldock said: “Peak trading was solid and in line with expectations, producing record sales against a tough backdrop.

“In UK mobile, performance was as expected and overall, our peak trading was disciplined and well-executed, with stable gross margins.

“In UK electricals we grew sales, despite a challenging backdrop and a declining market.”

The company added that its full-year profit guidance of £300m was unchanged and that international like-for-like sales rose by 5%, with especially strong figures in Sweden, Denmark and Greece.

Julie Palmer, partner at business consultancy Begbies Traynor, said: “Dixons Carphone will breathe a sigh of relief as it avoided becoming the latest retailer to suffer from a poor Christmas trading performance, as the harsh economic winter has affected the sector.

“Yet, the firm’s sales grew by only 1% as lower customer footfall and increased competition, particularly online, have taken their toll.”

Last May, the company announced plans to close 92 of its 700 stores.

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