Author Lauren Howells
Currency fluctuations after the Brexit vote, resulting in more expensive handsets, coupled with “incremental” innovation, has resulted in an increasing number of people opting to hold on to their mobile phones for longer, Dixons Carphone has said.
In an unscheduled statement by Dixons Carphone Group Chief Executive, Seb James, the company revealed that it expected its profits for 2017/18 to be in the range of £360m to £440m, down from £501m last year.
Share prices plummeted more than 30 per cent on Thursday morning after the trading statement was released.
Abolishment of EU roaming charges expected to hit profits
The company, which trades as CurrysPCWorld and Carphone Warehouse in the UK & Ireland, also talked about the hit its profits may take because of the new EU rules which have scrapped roaming charges, for those who wish to use their phones abroad in Europe.
Mr James said that while it was difficult to assess the precise impact of these changes due to the limited data currently available, “we currently estimate that the net negative effect will be a range of between £10m and £40m this year.”
Speaking with regards to the increased number of people who are choosing to hold on to their mobile phones for longer, Mr James said: “…while it is too early to say whether important upcoming handset launches or the natural life cycle of phones will reverse this trend, we now believe it is prudent to plan on the basis that the overall market demand will not correct itself this year.”
Not all bad news for Dixons Carphone…
“It is good to see this performance from our UK electrical business particularly against the Euros football championship last year, as well as strong sales from our Nordic and Greek businesses. In all of these markets, we have seen growth in revenues, market share and profitability with overall product margins remaining flat in electricals.”
iPhone 8 release imminent
Dixons Carphone is reportedly hoping that the iPhone 8 – due to be released in September – will be a hit with consumers.
Mr James reportedly said that they weren’t expecting the Samsung Note 8 to make as much of an impact.
Consumer spending falling
This news comes at a time when many are already worried about the impact Brexit is having (and will have in the future) on the way shoppers are spending their hard-earned cash.
Earlier this month, figures released by Visa revealed that UK consumer spending had decreased in each of the past three months, the longest period of decline since the five month period ending in February 2013.
Additionally, a fall in sales in the UK car industry of 9.3% in July, was reported as a sign that consumers and businesses may be growing more and more reluctant to commit to “big spending decisions”, possibly due to the ‘Brexit-effect’.
Earlier this week, chief executive of advertising group WPP, Sir Martin Sorrell, reportedly warned of a global economic slowdown.