Dixons Carphone to close 531 UK stores and cut 2,900 jobs

Dixons Carphone to close 531 UK stores and cut 2,900 jobs

By James Davey

FILE PHOTO - A sign displays the logo of Dixons Carphone at the company headquarters in London, Britain August 1, 2017. REUTERS/Neil Hall

LONDON (Reuters) - British electricals retailer Dixons Carphone (DC.L) will close all 531 UK standalone Carphone Warehouse stores and shed 2,900 jobs as part of a plan to turn around its loss-making mobile phones business, it said on Tuesday.

Shares in the group, which also trades as Currys and PC World in Britain, were up 3.7% at 0858 GMT after it also said it had not yet seen a material impact from the coronavirus outbreak and was maintaining its full year profit forecast.

Though it is preparing for a future impact from the outbreak it noted that recent trading had been solid.

“As customers prepare for time at home, fridges and freezers, small domestic appliances and laptops have seen notable increases in sales,” it said.

The Carphone Warehouse stores, representing 8% of Dixons Carphone’s total UK selling space, will shut on April 3. A further 1,800 workers are expected to take new roles internally.

Dixons Carphone will continue to sell mobile phones through Carphone Warehouse shop-in-shops in 305 large Currys PCWorld stores and online.

The group has had to revamp its mobile business because customers are changing the way they buy devices and connectivity, replacing their handsets less often and buying them separately or as part of more flexible bundles.

“Our customers have been changing for some time how they shop with us and we have to respond,” chief executive Alex Baldock told reporters.

Coronavirus was not an immediate driver for the closures, he maintained.

“It’s always been the plan to announce it today,” he said. “All the current health crisis does is underline the importance of getting the business in shape for future success.”

The mobile phones business is forecast to make a 90 million pound ($110 million) loss in the 2019-20 year but breakeven by 2021-22.

The group said it remained on track to meet its guidance for overall adjusted pretax profit in 2019-20 of 210 million pounds despite a hit to profit at its Dixons Travel airport stores and the negative impact of currency exchange, as well as for net debt to be lower year-on-year.

“We are aware that our stores could experience a significant reduction in sales in the months ahead and we are modelling a range of downside scenarios and planning accordingly,” it said.

Plans include switching more fulfilment to the group’s online channels and managing costs and cash closely.

The group’s Greek stores will be closed, probably for at least two weeks, from March 18.