Dixons Carphone Group PLC (LON:DC.) today unveiled a bigger push into “connected home services” with the formation of a strategic partnership with UK energy supplier SSE PLC (LON:SSE).
Europe's largest electricals and mobile phone retailer also reported forecast-busting first-half results, but its shares fell on cautious outlook comments.
Dixons Carphone saw its underlying pretax profits rise by 19% to £144mln for the 26 weeks to October 29, above consensus expectations for £141mln, and up from £121mln a year earlier.
Group like-for-like sales were up 4% in the period, driven by a 5% rise in the UK & Ireland division, while its operations in the Nordics and South Europe saw a boost from the weakness of the pound since June’s Brexit vote.
READ: Dixons first-quarter strong ....
The group, which trades as Currys, PC World and Carphone Warehouse in the UK and Ireland, owns the Elkjop and Elgiganten stores in Nordic countries and Kotsovolos in Greece.
Dixons Carphone also said its Connected World Services business performed strongly in the first half, with revenues up 46% to £98mln helped by deals with US giant Sprint Nextel (NYSE:S) and UK broadband and telecoms provider Talk Talk PLC (LON:TALK).
The unit’s latest venture with SSE, which has a combined UK customer base of 10 million households, will see Dixons Carphone provide support and services to manage devices in their homes "from boilers to laptops, dishwashers to Wi-Fi." No financial details of the deal were disclosed.
Dixons Carphone chief executive Seb James said: "Looking forward, we remain optimistic about our ability to continue to gain market share in all our key markets, and, while we have still not seen any effect on consumer demand as a consequence of Brexit, we have been planning for the possibility of more uncertain times ahead."
He added: “We are also planning our offer so that potential currency impacts are minimised for the customer, and are ensuring that next year, as always, everybody can be absolutely sure that they won't get a better deal anywhere.”
Nick Bubb, an independent retail analyst, commented: "In terms of the outlook for the key peak trading season, CEO Seb James doesn’t give much away in the statement, but he sounds confident and no doubt will drop a few bon mots on the 9am analysts conference call."
But shares drop ....
Dixons Carphone shares topped the FTSE 100 fallers list, however, shedding 6.8%, or 24.9p at 341.8p in mid-morning trading.
George Salmon, equity analyst at Hargreaves Lansdown, said: “Dixons Carphone’s strong first half numbers mask the threat of two potential challenges brought on by the Brexit vote.
“Despite saying that it has yet to see any effect on demand as a result of the referendum, this could well be put to the test in the future.
“We have yet to see if the gloomy predictions about the UK’s economy are accurate, but any negative impact would surely be felt by the group. After all, big-ticket electronic items fall into the discretionary spending category.
“In addition, even if the economy remains resilient to the shock of leaving the EU, the threat of rising inflation hangs over the group.”
He added: “ With these challenges in mind, its no surprise to see the group planning for the possibility of more uncertain times ahead.”
-- Updates with additional broker comment, share price --