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Chain to close stores as consumer habits alter

carphone warehouse
A branch of the Carphone Warehouse in central London.
carphone warehouse A branch of the Carphone Warehouse in central London.

Nearly 100 Carphone Warehouse stores are to close this year as the retailer’s new boss pledges to “take action” to tackle challenges in the firm’s troubled mobile phone unit.

Dixons Carphone said it will shut 92 Carphone Warehouse standalone stores over the next 12 months as it grapples with changing consumer habits.

The firm said hard-pressed consumers are holding on to older devices for longer and going “Sim-only”, which have dented the group’s performance.

It insisted that no jobs will be lost as staff will be offered the chance to move to larger outlets nearby.

New boss Alex Baldock, who replaced the long-standing Seb James earlier this year, said: “Right now, with our international business in good shape, we’re focusing early action on the UK.

“In electricals, we’re focused on gross margin recovery. In mobile, we’re stabilising our performance through improvements to our proposition and network agreements.

“In both, we’ll work hard to improve our cost efficiency. We won’t tolerate our current performance in mobile, or as a group.”

The store closures will add to pain on the high street, with Dixons Carphone adding its name to the long list of retailers – Carpetright, Mothercare, Byron and others – to have shuttered outlets in the face of falling consumer confidence.

Mr Baldock is renegotiating contracts at Carphone Warehouse with the aim of “improving our business model”, while also pointing to a difficult electricals market.

Shares tumbled over 20% in morning trade as the company also updated the market on trading and warned that profits would continue to fall.

Dixons Carphone said full year pre-tax profit is expected to come in at £382 million, down from £501m in 2017. Next year the figure will fall to £300m, the firm added.

Dixons Carphone added total revenue rose 3% in the year to April 16, while like for like sales were up 4%.

Neil Wilson, chief market analyst at Markets.com, said: “What can only be described as a nasty little profits warning from Dixons Carphone this morning. Grim for sure but, as new boss Alex Baldock points out, it’s all entirely fixable.

“Dixons looks a bit flabby, and the market is just as soft, but there should be some easy wins in terms of making it leaner, especially around store closures.”