Published: Fri, August 25, 2017
Economy | By Melissa Porter

Dixons Carphone Plunges as Mobile Slowdown Leads to Warning

Dixons Carphone Plunges as Mobile Slowdown Leads to Warning

Shares in Dixons Carphone went into freefall today after the retailer warned over a Brexit profit hit as soaring costs for new mobile phones means people are holding on to older models for longer.

As a result, Dixons Carphone now expects headline pre-tax profit for the full year to be in the range of £360 million to £440m. That compared with last year's equivalent of 501 million, a figure that most analysts had previously thought it would get fairly near to.

Dixons Carphone, the owner of Carphone Warehouse and Dixons, has become the latest United Kingdom giant to issue a profit warning, causing its share price to slump 30% in early morning trading.

The FTSE-250 listed company's shares are now trading down 23% at 177p, which is a long way off the all-time high of 505p seen in early 2016.

"However, over the last few months, we have seen a more challenging United Kingdom post-pay mobile phone market".

He said that the fall in the pound had raised...

In an unscheduled statement, Dixons Carphone said it has seen a "more challenging" environment in the British cellphone market as a result of currency fluctuations that have made handsets more expensive and a slower pace in technical innovation.

Like-for-like sales in the United Kingdom and Ireland rose four percent in the three months to June, but this was mainly thanks to growth in electricals, Dixons Carphone said. On average they had forecast 495 million pounds, according to Thomson Reuters data.

Speaking on a conference call with analysts, James said customers are keeping their handsets for an additional four-to-five months.

"We're anticipating that iPhone 8 launch will be much better, maybe not as good as the iPhone 6, but more like the same numbers as the iPhone 6S, as opposed to the disappointing sales of the iPhone 7".

Historically these items have mostly been net positive to the business, but, largely caused by changes in European Union roaming legislation, we now believe that the outcome is likely to be net negative this year. "The forthcoming generation of Samsung Galaxy and iPhone handsets claim to make big steps forward, but recent history hasn't delivered much that's revolutionary".

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