Could Dixon Carphone’s year get much worse? Shares in Europe’s largest consumer electronics and electricals retailer have fallen more than 50% in 2017, putting them among the worst decliners on London’s stock exchange.
Dixons has borne the brunt of Brexit-linked consumer inflation concerns due to strong dependence on big ticket items. Investor wariness was exacerbated by a profit warning in August, which the group said was chiefly due to mobile phone customers choosing to hold on to handsets for longer rather than upgrade. As a result, Dixons said pre-tax profits in the year to April would fall by as much as 28% to as low as £360m. At best, profits would be down 12% to £440m.
The group is set to report half-year results on Wednesday and profit expectations for these have been slashed even more sharply, given that Dixons typically books most income in the second half of the year. Average forecasts have clustered around £61m, almost 58% below H1 2016 earnings. The group has signalled that market pessimism has gone too far, though investors will also want to see underlying sales in the key UK and Ireland region keep pace with the 4% rate of Q1.
Low expectations could well be beaten, with a reflexive impact on the shares, which have recently been languishing near prices last seen in late 2009.
Dixons Carphone will release earnings for the first half of its 2017/18 financial year on Wednesday 13th December at 0700 GMT.
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