Shares in electricals retailer Dixons Carphone (DC.) sparked nearly 15% higher to 124.4p on Wednesday as the company revealed strong sales of laptops, TVs, fitness trackers and gaming consoles helped drive a massive rebound in first half profit.
Strong online sales more than offset the forced closure of stores during Covid-19 lockdowns and the PC World-to-Currys owner and work-from-home beneficiary also reported strong current trading.
Like-for-like electricals sales grew by 16% over the six weeks to 12 December despite virus-induced store closures in the UK and Greece. This diverted investors’ attentions away from another poor performance from the mobile phones business, in the midst of a much-needed restructuring.
ONLINE SHINES
‘Despite muted mobile sales, the UK’s lockdown periods have proven a real boon for the company’s online offering as housebound consumers dived in to its home electricals range to stock up on home office equipment, TVs, appliances and high profile new Xbox and PlayStation gaming consoles,’ said Julie Palmer, partner at Begbies Traynor.
For the half to 31 October, Dixons Carphone’s adjusted pre-tax profit rebounded from last year’s £2 million to £89 million, while online electricals sales surged 114% to £1.8 billion amid multiple lockdowns.
With the pandemic ravaging many major retailers, there was also relief as Dixons Carphone maintained its guidance for the current year and medium term alike.
‘We’re winning online, and have triple-digit growth and rapid market share gains to show for it,’ enthused chief executive Alex Baldock.
‘Still, most customers prefer to buy technology through a mix of online and in store, and we’ve innovated fast to bring the best of both digital and physical shopping to every customer.
‘In particular, ShopLive 24/7 live video shopping points to a retail future where every customer online can get face-to-face advice from an expert store colleague.’
SUSTAINED PACE OF GROWTH
Perhaps the most important point from today’s results is the continued strong pace of growth in Dixons Carphone’s electrical sales, according to AJ Bell investment director Russ Mould.
‘There was a fear that its success earlier this year was simply down to a one-off gain, namely people buying laptops so they could work from home and perhaps replacing a TV or a washing machine that’s been worked harder during lockdown,’ said Mould.
‘Ongoing sales momentum could suggest people have been happy with the service they’ve experienced and they’re back for more, or it could be that the prolonged period of being at home has focused more attention on upgrading appliances.’
Nevertheless, Mould warned that the high street retailer still faces a tough 2021 ‘as there will be large comparative figures to beat and any return to normality could see consumers focus less on their home needs. There is also the question of how Brexit might lead to supply disruptions. Those issues are going to apply to a wide range of retailers who may be sitting pretty now, but will have to work even harder next year.’
