Aug 24, 2017

Dixons Carphone tumbles on profit warning

Dixons Carphone shed almost a quarter of its market value on Thursday morning after the UK smartphone and electricals retailer warned on profits, blaming a sluggish mobile market. Dixons' profit warning comes as phonemakers signal the market is saturated and are rolling out upgraded models. Alistair Davies, analyst at Investec, said: "Although new product launches may temporarily reverse these trends, questions over whether there is a longer-term structural shift away from bundled postpay and how that impacts Dixons Carphone, are likely to persist." Thursday's update marks an abrupt change of tone from Dixons, which in June unveiled a 10 per cent rise in full-year pre-tax profits to £501m and said the "UK consumer environment seems to be holding up for us". It comes at a time when rising food costs are squeezing retail sales across the UK. Dixons said there were two other factors behind the profit downgrade.

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