Top Stories
Top Stories

UPDATE 2-Dixons Carphone's turnaround plan makes a good start

James Davey

* Underlying sales in Christmas period up 1 pct

* UK electricals sales up 2 pct, mobile sales down 7 pct

* Maintains profit guidance for 2018-19 (Adds detail, shares)

LONDON, Jan 22 (Reuters) - Dixons Carphone's turnaround plan has made a good start, the British retailer said on Tuesday, reporting a small rise in underlying revenue in the key Christmas period and keeping its full-year profit guidance.

The group, which trades as Currys PC World and Carphone Warehouse in Britain, reported a rise in electricals sales in its main UK business but another big fall in mobile phone sales.

Dixons Carphone has been hurt by tougher conditions in the mobile phone market as customers keep their handsets for longer.

Last December it slumped to a 440 million pound ($566 million) first-half loss, cut its dividend and launched a new strategy.

Under Chief Executive Alex Baldock the group plans to focus on its core electricals business while restoring its mobile business to profit by revamping its relationships with network operators. It also wants to bring its stores and online businesses closer together and develop its credit operations.

It said on Tuesday the early signs were encouraging.

Group like-for-like revenue rose 1 percent in the 10 weeks to Jan. 5 - just ahead of analysts' average forecast for a flat outcome.

Shares in Dixons Carphone, down 26 percent over the last year, were up 1.2 percent at 0820 GMT, valuing the business at about 1.6 billion pounds.

The stock rose sharply on Monday after Sky News reported that activist investor Elliott Advisors was exploring plans to buy a "big stake" in the firm, and might want it to sell its overseas businesses which account for about 40 percent of total sales.

In Dixons Carphone's main UK & Ireland business, electricals like-for-like sales rose 2 percent but mobile sales on the same basis fell 7 percent, reflecting a continued decline in the post-pay market.

"In UK electricals we grew sales, despite a challenging backdrop and a declining market," said Baldock, highlighting strong performances in televisions, smart technology and gaming.

"In UK mobile, performance was as expected," he added.

The group also trades as Elkjop, Elgiganten and Gigantti in Nordic countries and Kotsovolos in Greece. Like-for-like sales rose 3 percent in the Nordics and jumped 19 percent in Greece.

Gross profit margins across the group were stable and it kept its guidance for a 2018-19 underlying pretax profit of around 300 million pounds, down from 382 million in 2017-18.

($1 = 0.7774 pounds) (Reporting by James Davey; Editing by Kate Holton and Mark Potter)