Dixons Carphone to Accelerate Closings as Sales Beat Estimates

Carphone Warehouse concessions will be inserted into stores

Photographer: Chris Ratcliffe/Bloomberg

U.K. electronics retailer Dixons Carphone Plc plans to accelerate a program of store closings as it consolidates its banners under one roof.

The company will reduce outlet numbers by 134 over the next year as it combines its PC World and Currys stores, while inserting a Carphone Warehouse outlet into each, it said in a statement Tuesday. Dixons Carphone also reported holiday sales growth that exceeded analyst expectations and said full-year earnings are likely to beat estimates slightly.

The reduction in store space marks the continuation of a program that pre-dates the 2014 merger of Dixons Retail and Carphone Warehouse. U.K. retailers are cutting back on store space and increasing investment in distribution as more shoppers shift to online purchasing.

Dixons Carphone is “very confident that the impact on sales and colleague numbers will be neutral or better,” the company said in the statement. Those staff affected by the closures will be offered the opportunity to work in another store.

The shares fell 1.3 percent to 461 pence in early London trading.

The retailer said it will spend 50 million pounds refitting stores that will incorporate the three banners. A provision of 70 million pounds will be made for the closures. Earnings should benefit by 20 million pounds annually after the first year, it said.

Dixons Carphone forecast pretax profit for the year through April will be in a range of 440 million pounds ($625 million) to 450 million pounds. That compares with the average estimate of 12 analysts surveyed by Bloomberg of 439.4 million pounds.

Same-store sales in the U.K. and Ireland rose 5 percent in the 10 weeks ended Jan. 9, compared with the median estimate of 13 analysts for 3 percent growth.

“In all territories we saw continued market share gain, especially in U.K. mobile,” Chief Executive Officer Sebastian James said in the statement.

For a second year running, Dixons Carphone overcame the logistical challenges presented by the deluge of online orders placed on Black Friday, when the retailer said it had a record day of business. The company’s performance contrasts with that of J Sainsbury Plc’s takeover target Argos, where sluggish sales of electronic products weighed on revenue over the Christmas period.

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