Dixons Carphone shrugs off slowdown in consumer spending as it reports rises in full year profits and sales

The retailer proposed a dividend rise of 15% year on year 

The Share Centre recommends Dixons Carphone as a ‘buy’ for higher risk investors with a balanced portfolio

Carphone Warehouse By Dr Neil Clifton (CC-BY-SA-2.0)

By Dr Neil Clifton (CC-BY-SA-2.0)

As Dixons Carphone reports its full year results Helal Miah, investment research analyst at The Share Centre, explains what it could mean for investors:

“Dixons Carphone today reported record profits of more than half a billion pounds despite wider signs of a slowdown in consumer spending. The group, who owns Currys, PC World and Carphone Warehouse, said profits before tax rose 10% whilst full year sales came in at £10.6bn which was up 4% on a like for like basis. Both these figures were slightly ahead of expectations and thus the share price at the market open has seen a modest rise, despite the rest of the market pulling back.

“Like for like growth in the UK & Ireland, the retailer’s most important market, was an encouraging 4% while Southern Europe saw a 6% growth. Interested investors may want to acknowledge that the Nordic region remains its weak spot. Dixons Carphone also informed the markets today that demand for computing products and white goods was solid and this helped offset the more challenging market in mobile phones made worse by Samsung’s exploding Galaxy Note 7 and limited launches and delays of new models.

“These are very good numbers given the recent pessimistic mood in the UK retail environment. Indeed they partly reflect the structural changes the company has made including improvements in its cost base, the investments into the digital platform, improved price competitiveness and customer satisfaction levels. Management suggest that these factors will continue to help performance in the years to come.

“We continue to recommend Dixons Carphone as a ‘buy’ but would reiterate that it is suitable for higher risk investors with a balanced portfolio. Even with these good numbers we view that the macro environment will make trading conditions tougher for the group and the sector and we would therefore advise investors drip feed into the shares.”

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