Shares in Dixons Carphone plunged by 27% after the firm issued a profit warning for 2018/19 and announced 92 store closures as its troubled mobile phone business continues to face “challenges”.
The high street giant posted an increase in sales, but said that pre-tax profit in its full year results in June is expected to come in at around £382m, down from £501m in 2017.
The retailer has been issuing profit warnings in trading updates since last summer.
However, new chief executive Alex Baldock warned on Tuesdaythe decline would continue into 2018/19 with pre-tax profits of £300m – much lower than markets had previously been expecting.
The group, which also owns the Currys and PC World electrical brands, said total revenue rose by 3% in the year to April 16, while like-for-like sales were up by 4%.
In the UK, comparable revenue grew by 2% and was up by 1% in the fourth quarter.
However, the company said its mobile phone business remained under pressure, partially due to customers shunning handset upgrades.
“Overall, gross margins are expected to be down, partially offset by cost initiatives,” the retailer said.
“We have taken early action here with the planned closure of 92 Carphone Warehouse standalone stores this year.”
Image: Dixons Carphone owns Currys PC World
A spokeswoman told Sky News no jobs were expected to be affected as staff would be redeployed.
Mr Baldock said: “Nobody is happy with our performance today.
“Eight weeks in the business have cemented my optimism about Dixons Carphone’s long-term prospects. I’ve found exceptional strengths, and though there’s plenty to fix, it’s all fixable.
“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. We know we can do a lot better.
“There’s so much more to come from Dixons Carphone, though plenty of hard work lies ahead.”
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Dixons Carphone has a 42,000-strong workforce in nine countries, including Greece and Norway.
Despite a tough market the firm was buoyed by better sales in its international division, with like-for-like sales in the Nordics up by 9% and in Greece up by 11%.