Can Dixons Carphone avoid any more data breach drama with next Thursday’s full year results?
Up until very recently, the high street staple was having a pretty strong 2018. Though it had trickled lower by the end of March, from an opening price of £1.95 to a 3 month low of £1.70, the stock rocketed higher across spring, striking a 9 month peak of £2.35 on May 22nd.
However, a profit warning just one week later sent the company tumbling from that high, leaving it back at £1.70. Since then it has mounted a minor comeback, briefly grazing £2 despite the news that there had been ‘an attempt to comprise’ 5.9 million payment cards and 1.2 million personal data records the previous July. Dixons Carphone PLC now sits at a current trading price of £1.98.
As mentioned, the company’s most recent update in May was costly, leaving the stock down 20% in a single session. There Dixons announced it would be closing 92 standalone Carphone Warehouse stores after revealing that full year pre-tax profits for 2018/19 would come in around £300 million, a huge whack lower than the £387 million forecast. That also a 27% drop from the £382 million it expects to post in 2017/18, which itself marks a sharp decline from 2016/17’s £501 million.
What’s interesting is that, sales-wise at least, Dixons has had a decent year. Group revenue rose 3%, while like-for-like sales were actually up 4%, breaking down as a 2% increase in the UK & Ireland, a 9% jump in the Nordics and an 11% rise in Greece.
Given that May’s statement was unscheduled, there is the potential that Dixons Carphone has now got all the bad news out of the way. That might depend on how accurate the £382 million pre-tax profit estimate actually proves to be. An update on the price of the data breach could be crucial, though it might be too early for that. How much Dixons Carphone will eventually be fined is up to the Information Commissioner’s Office, and whether it uses the costlier GDPR rules or the kinder regulations of the previous regime.
Dixons Carphone PLC (LON:DC) has a consensus rating of ‘Hold’ alongside an average target price of £2.02.
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