Dixons Carphone plc
Further year of strong Christmas trading; good progress on CWS
Trading Update (10 weeks ended 9 January 2016)
• Group like-for-like revenues up 5% with record Black Friday and market share gains in all markets
• Group Headline PBT range of £440m to £450m expected for the full year, slightly ahead of consensus
Encouraging progress within Connected World Services
• Sprint store trial in the US successful, agreement to activate full joint venture to manage a targeted 500 stores
• Extension of existing honeyBee agreement with major US client to include two US carriers
• New distribution agreement with TalkTalk in the UK
3-in-1 roll out across UK and Ireland estate
• Significant UK property plan to be implemented in FY 2016/17
• c.£20m incremental annual earnings from FY 2017/18
• No impact on colleague numbers
Headline like-for-like1 revenues (10 weeks ended 9 January 2016) |
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UK & Ireland |
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5% |
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Nordics |
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3% |
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Southern Europe |
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9% |
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Group |
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5% |
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Seb James, Group Chief Executive, said:
"I am very happy to be reporting a further year of good like-for-like growth over our peak trading period. The two-humped camel shape that emerged last year was further accentuated with an all-time record day on Black Friday and a strong promotional period after Christmas. In all territories we saw continued market share gain, especially in UK mobile. In the Nordics we had a huge Black Friday, but currency weakness and oil price continues to impact the Norwegian market, and so it was good to see growth despite this. In Southern Europe we have had a strong peak with our Greek business in particular going from strength to strength. Once again, customer satisfaction metrics moved forward year-on-year as did price competitiveness.
Integration continues to go well, all key activities are more or less complete, and it gives me real pleasure to see the emergence of a distinct - and sometimes quirky - Dixons Carphone culture that contains some of the best elements of our different histories. We are seeing the benefits that we expected from the merger, and these will roll through into the next full year. As part of this process, we are now also taking the opportunity to put our estate into its long-term shape by rolling out the 3-in-1 format across the UK and Ireland with a major property programme that will enhance long-term earnings and improve our customer experience. Our experience has taught us that the net effect on both sales and colleague levels is likely to be neutral or better.
It has been a busy time for Connected World Services. I am really delighted that our Sprint trial has gone so well, and we have now agreed with Sprint that the joint venture should go into full production towards its target of 500 stores. We have also extended our agreement with a major US manufacturer to implement honeyBee for two US networks in their retail stores. In the UK we have signed a significant distribution agreement with TalkTalk. With a strong pipeline, we are excited about the future for CWS.
This has been a good year. We are continuing to invest in CWS and, in the Nordics, the twin effects of pricing investment and currency devaluation will have some impact this year. The result of all of this is that we anticipate a profit before tax slightly above consensus and in the range of £440m-£450m. Finally, it has been a pleasing few weeks for which the team have fought hard in a competitive market place, and I would like to record my sincere thanks to all of our colleagues that made it happen."
(1) Like-for-like revenues are calculated based on Headline store and internet sales using constant exchange rates. New stores are included where they have been open for a full financial year both at the beginning and end of the financial period. Sales from franchise stores are excluded and closed stores are excluded for any period of closure during either period. Customer support agreement, insurance and wholesale revenues along with revenue from Connected World Services and other non-retail businesses are excluded from like-for-like calculations. Revenues from Carphone Warehouse stores-within-a-store are included in like-for-like.
3-in-1 roll out across UK and Ireland
Following the merger, it has become clear to us that customers really like our fully refurburbished 3-in-1 store concept, and we have decided to launch a major programme to roll this format out across the whole market and put the portfolio into its long-term state. This will involve merging the remaining PC World and Currys stores and inserting a Carphone Warehouse. While this will reduce our store numbers by 134, we have been doing this - on a smaller scale - for some years and are very confident that the impact on sales and colleague numbers will be neutral or better. In addition, our experience shows that that colleagues prefer working in - and customers prefer shopping in - our new 3-in-1 format stores.
We will be investing incremental capex of circa £50m to refit these stores. We will also recognise a provision of approximately £70m in FY 2015/16 comprising property exit costs, asset write downs and operational costs associated with the programme. Given that the programme will be implemented during FY 2016/17, we anticipate that the benefit to FY 2016/17 earnings will be modest, but thereafter this activity will contribute approximately £20m of incremental annual earnings from recurring costs savings.
Connected World Services (CWS)
Today we announce new developments in three of the distinct business areas within CWS - connected retailing, technology platform and support & services. In connected retailing, the fifteen store Sprint trial in the US has been highly successful and we have now initiated the full joint venture to manage a targeted 500 stores. Separately we continue to expand on our consultancy agreement with Sprint and deliver significant benefits to both parties. Within our technology platform business area we have extended our agreement with a major US manufacturer to use our market leading software platform, honeyBee, with two US mobile networks. In support and services we have entered into a significant new distribution agreement with TalkTalk to support the sales and distribution of mobile, TV and broadband connectivity.
Investor and analyst webcast
There will be a management presentation for investors and analysts at 09:00 am (GMT) this morning. The presentation will be broadcast on our website, www.dixonscarphone.com via a listen-in only webcast.
Dial-in - UK/Int'l: +44 (0) 20 3003 2666; passcode: 1144963 / Seven-day replay - UK/Int'l: +44 (0) 20 8196 1998; passcode: 1144963
Next announcement
The Group will publish its Q4 trading update on Wednesday 25 May 2016.
For further information
Kate Ferry |
IR, PR & Corporate Affairs Director |
+44 (0)7748 933 206 |
Mark Reynolds |
Head of Investor Relations |
+44 (0)7979 696 498 |
Hannah Collyer |
Head of Media Relations |
+44 (0)7834 256 775 |
Nick Cosgrove, Helen Smith |
Brunswick Group |
+44 (0)207 404 5959 |
Information on Dixons Carphone plc is available at www.dixonscarphone.com . Follow us on Twitter: @dixonscarphone and @DCSebJ |
About Dixons Carphone Dixons Carphone plc is Europe's leading specialist electrical and telecommunications retailer and services company, employing over 40,000 people in 9 countries. Focused on helping customers navigate the connected world, Dixons Carphone offers a comprehensive range of electrical and mobile products, connectivity and expert after-sales services from the Geek Squad and KNOWHOW. Dixons Carphone's primary brands include Carphone Warehouse, Currys and PCWorld in the UK & Ireland, Elkjøp, Elgiganten, Gigantti and Lefdal in the Nordic countries, Kotsovolos in Greece, Dixons Travel in a number of UK & Ireland airports and Phone House in Spain, Sweden and Norway. Our key service brands include KNOWHOW in the UK, Ireland and the Nordics, and Geek Squad in the UK, Ireland and Spain. Business-to-business (B2B) services are provided through Connected World Services, PC World Business and Carphone Warehouse Business. Connected World Services aims to leverage the Group's existing expertise, operating processes and technology to provide a range of services to businesses. |
Certain statements made in this announcement are forward-looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Information contained on the Dixons Carphone plc website or the Twitter feed does not form part of this announcement and should not be relied on as such.
