Dixons Carphone has revealed profits fell by almost 30 per cent last year, dropping to £289m from £404m, days after admitting to losing customers data in a massive cyber attack.
The group said its reduced profit was due to charges of £93m during the year to 28 April, and came despite a 2 per cent increase in revenues, and double-digit growth in online sales.
UK electricals delivered 3 per cent like-for-like revenue growth over the period, while UK mobile growth remained flat year on year despite a 3 per cent decline in the first half.
Looking ahead, the firm said it is “budgeting for a contraction” in the UK electricals market, and expects to see costs rise in the sector, mainly due to the National Living Wage and IT depreciation.
Earlier this week, Dixons revealed that it had lost almost 6 million customer bank card details, and more than a million personal data records, due to a cyber attack.
The company said that there was no evidence of fraud on the cards as a result of the incident, but admitted that it had fallen short of its responsibility to protect customer data.
Meanwhile, last month the group’s share price plunged 20 per cent after it announced that it would close 92 of its 650 stores in an effort to cut costs.
Alex Baldock, Dixons Carphone’s chief executive, who joined two months ago, said: “Recent events have underlined that we have plenty of work to do, and it will take time, but I'm even more confident than the day I took the job in our long-term prospects.
“We're number one, maintaining or growing share in each of our markets, with people and scale multi-channel capabilities no competitor can rival. We can make more of these strengths, by bringing clear long-term direction that sharpens our focus on our core, and that better joins up both our offer to customers and our business behind the scenes. There's nothing here that can't be done, and we expect top and bottom-line benefit of doing it.”
Richard Hunter, head of markets at interactive investor, said the results “make for some fairly grim reading”.
“There are... wider concerns regarding the sector, with phone upgrades lessening, the UK consumer potentially retrenching when considering big ticket purchases, and Dixons Carphone’s reliance on customer facing staff an additional cost burden which digital direct businesses do not face. The company has much to prove in a difficult environment,” he added.
“All is not lost, however. As the group maintained some of its market leading positions, overall revenue edged up, there was a reduction in net debt. Double digit growth in online sales could be a positive precursor to future prospects, whilst also complementing the in-store option of knowledgeable customer facing staff.”
Shares in Dixons rose more than 2.5 per cent in early trading.
