Will a dire Dixons Carphone fall any further following next Thursday’s first quarter update?
There were points this year that things seemed to be going the retailer’s way. Opening at £2.02, it had fallen to £1.71 by towards the end of March, only to rally all the way back to a 9 month peak of £2.36 in late May.
Since then, however, it’s all gone Pete Tong. A shock profit warning on May 29th – seemingly issued as an expectation-adjuster from new CEO Alex Baldcock – sparked a 20% single session collapse, as Dixons warned that while its 2017/18 pre-tax profit would be at the top end of analysts’ forecasts at £382 million, the year after it would plunge to £300 million.
The firm’s full year figures were then released just shy of a month later, where the group headline profit before tax was confirmed at £382 million, a huge drop from the £500 million seen the year previous. Like-for-like sales, meanwhile, rose 4%, with statutory revenue up 3% to £10.5 billion. The UK & Ireland seriously lagged the company’s other divisions, with LFLs up just 2% compared to the Nordics’ 9% and Greece’s 11%.
And the bad news kept coming. Having revealed a data breach in June, the company then announced in July that 10 million customers had been affected, not the initially estimated 1.2 million. This only added to the sense of discord around the stock, with it eventually hitting an 8 month low of £1.63 in late August. Dixons Carphone PLC now sits at a current trading price of £1.67.
In terms of Thursday’s Q1 figures, Dixons needs to try and wash off some of the stench of failure polluting its image. The maintenance of the kind of like-for-like growth it posted in 2017/18 would certainly help, especially if there was an improvement in the UK & Ireland.
Dixons Carphone PLC (LON:DC) has a consensus rating of ‘Hold’ alongside an average target price of £1.97.
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