The merger between electrical goods retailer Dixons and mobile phone retailer Carphone Warehouse earlier this year saw two of the strongest brands on the high street unite. As expected, this has had a positive impact upon sales performance, with the newly created Dixons Carphone brand reporting a very strong first half in its first year of trading.
During the six months to the start of November, pre-tax underlying profits rose by 30 per cent to reach £78 million, with white goods and high end televisions selling particularly well in the UK thanks to the introduction of initiatives such as free warranty cover. Although allowing for one off costs such as writing down the value of assets in Germany and the Netherlands caused the final result to be a £20 million loss, the company stands in good stead to record strong turnover by the end of the year due to a group sales rise of 5 per cent.
Sebastian James, the chief executive of the merged company, states that while UK sales have risen strongly, the ongoing economic issues in the Eurozone have posed some significant problems for Dixons Carphone.
He says; “We have seen a barnstorming performance from our UK and Ireland division.
“This has been driven by continued improvements in price and service, competitive changes, technology launches and some recovery in the economy.
“Life has been tougher for our smaller European phone businesses who are strategically less able to be robust in the face of market changes and we are in the midst of restructuring and reviewing these operations.”
As a result of these issues and ensuing restructuring operations, Mr James announced that the group’s Netherlands store portfolio will shrink by 50 stores during the second half of the financial year. In addition, it will be closing all retail and wholesale operations in Germany due to a combination of poor economic conditions and strong domestic competition.
Dixons Carphone currently operates in 14 countries across the world, with the main focus being in Europe. Furthermore, it employs more than 40,000 workers, many of whom are situated in the Currys, PC World and Carphone Warehouse subsidiaries in the UK and Ireland.
Part of the reason for the group’s strong performance in the UK and Ireland has been put down to the collapse of rival chain Phones 4U, which was forced into liquidation earlier in the year when major clients chose not to renew trading contracts. This has allowed Dixons Carphone to take a controlling portion of the mobile phone market, with the knock on effect seeing a comparable rise in sales of tablet computers and laptops.
However, Phones 4U’s demise has also allowed Dixons Carphone to capitalise upon opportunities, with the group having converted numerous Phones 4U concessions within Currys and PC World stores into Carphone Warehouse concessions. This also allowed Dixons Carphone to retain staff members from Phones 4U, lowering the number of jobs lost and growing its empire further.
