Shares in Dixons Carphone (DC.) rallied 5.5% to 86.4p on Thursday after the electricals-to-mobile phones retailer reported strong current trading with online sales on a growth tear.
The technology products purveyor also tantalised investors with news it is exploring the partial IPO of its lucrative Nordics business next year.
BRISK BUSINESS
For the 17 weeks ended 29 August, the Currys PC World-to-Carphone Warehouse brand owner delivered ‘strong sales in all markets’ with an ‘outstanding’ online performance.
UK & Ireland electricals like-for-like sales surged 12% higher. Online sales more than tripled year-on-year while stores were closed, and have continued at more than double last year’s sales since stores reopened, said Dixons Carphone.
Gross margins were lowered by the increasing proportion of online sales in the mix and the loss of higher margin sales through the Dixons Travel brand, whose airport-based stores mostly remain closed, while the group’s UK & Ireland mobile revenue was down 56% following the closure of standalone Carphone Warehouse stores.
BALDOCK’S TAKE
‘Online has continued to power ahead,’ commented chief executive Alex Baldock. ‘In the UK & Ireland alone we grew online sales by more than £500 million in four months, growth that stayed strong even as stores reopened.
‘We’ve started the year well, but nobody knows what the future holds and, like many, we remain cautious in our outlook.
‘We’re also in the early stages of exploring the option of listing a minority stake of our Nordics business next year,’ continued Baldock. ‘This would shine a light on the value of the Nordics business whilst retaining it as part of the group.’
The Nordics operation has proved a strong performer over the last decade and continued to grow profits and market share through the Covid-19 pandemic, growing its like-for-likes 17% in the 17 week period.
Dixons Carphone has ‘decided to explore the option of a partial IPO in 2021. A minority listing could further strengthen the capital structure whilst retaining the full benefits of Nordics staying firmly as part of the Dixons Carphone Group,’ explained the company.
While Dixons Carphone is in a net cash position and has access to over £1.3 billion of debt funding, the proceeds from a partial sale of the Nordics business would bolster its finances at an uncertain time where competition is cut-throat.
