Dixons Carphone Sees No Cause for Alarm Amid Political Upheaval

  • U.K. retailer says demand for electrical goods remains steady
  • Shares rebound from 12-month low as profit beats estimates

U.K. electronics seller Dixons Carphone Plc said it’s cautiously upbeat on the consumer economy, bucking the gloomy sentiment among non-food retailers as the country’s political upheaval saps spending.

Demand for electrical products from Sonos sound systems to fridge freezers is holding up in the face of an indecisive election result and the start of Brexit negotiations, the retailer said as it reported full-year earnings that beat analyst estimates.

“Our electricals business is the general bellwether of consumer confidence and it continues to trade robustly,” Chief Financial Officer Humphrey Singer said on a call with reporters. The shares rose as much as 3.4 percent.

The comments ease some of the nervousness that has seen Dixons Carphone’s stock price drop by almost a third since the U.K. voted to leave the European Union a little over a year ago. Investors perceive the country’s largest mobile and electricals retailer to be vulnerable to worsening consumer sentiment and higher sourcing costs caused by a falling pound.

“Sector sentiment is unhelpful, but Dixons has a strong market position and no major structural issues,” Stifel analyst Scott Ransley said by email. “The shares discount a lot of bad news.”

Singer’s upbeat tone contrasted with that of sofa seller DFS Furniture Plc, which this month warned that profit won’t meet estimates amid consumer uncertainty. This week, Debenhams Plc Chief Executive Officer Sergio Bucher said squeezed shoppers were reining in spending.

Dixons Carphone said adjusted pretax profit rose 10 percent to 501 million pounds ($641 million) in the 12 months ended April 29, beating analyst estimates of 491 million pounds.

The retailer boosted its share of spending on electronics at the expense of supermarket chains and independent sellers, although demand for mobile phones was weighed down by limited product innovation and more competitive SIM-only handset deals.

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