Dixons Carphone Group PLC (LON:DC.) shrugged off any post-Brexit concerns as it beat expectations to post record revenues last year.
For the 12 months to 29 April, the consumer electronics giant saw pre-tax profits rise by 10% to £501mln (2016: £457mln); comfortably topping the £475mln to £495mln guidance it forecast only a few weeks ago.
That came on revenues of £10.6bn; a 4% increase on a like-for-like basis.
WATCH: Dixons 'impressively continuing to grow market share' as it books record profits
The resilient performance comes as recent UK economic data suggests that the economy is starting to wind down again – always a worrying sign for retailers.
Household spending growth slowed in the first three months of the year, the first indication that consumers are starting to succumb to a combination of Brexit-induced price hikes and stagnant wage growth.
UK economy appears to be "holding up"
The consumer electronics giant – which owns Currys, PC World and Carphone Warehouse in the UK – said that the UK economy appears to “holding up” though, as sales edged 2% higher year-on-year.
Performance in the UK was underpinned by a strong showing from its electrical business, which the company said made gains in market share “across consumer electronics, white goods, computing and multiplay”.
Dixons Carphone’s European operations got a bump from sterling’s recent fall, with revenues from its Nordics and Southern Europe divisions jumping 20% (5% on a constant currency basis).
Excluding the currency tailwinds, sales in those divisions rose 5% and 4% respectively, predominantly due to new store openings.
Its smallest unit – Connected Worldwide Services – saw the biggest year-on-year jump however, with revenues soaring 41% to £213mln.
Change always represents opportunity, says boss
“Over the last few years a great deal of work has been done to make the company stronger, lower risk and more resilient,” said group chief executive Seb James.
We are seeing the upside of these efforts now as we declare record headline profits before tax of over half a billion pounds - up 10%.
“While the UK consumer environment seems to be holding up for us, there will undoubtedly continue to be changes in the way people buy all of the products that we sell from phones to washing machines.
“Change always represents opportunity, and our job is to find the propositions that keep us compelling to our customers forever.”
Robust performance, says City broker
“The company has reported headline PBT in line with expectations, reflecting a robust performance for the year, [while] solid growth has been delivered in the UK in a tougher consumer environment,” wrote Liberum analyst Adam Tomlinson in a note to clients.
“Management's outlook statement remains cautiously optimistic, with macro uncertainty and consumer confidence needing to be watched.
“Developments in CWS should give confidence over the division's long-term growth prospects. We do not expect material changes to consensus forecasts today [and] DC remains our top value pick in UK retail.”
Reassuring signs for the UK economy
“Shares in Dixons Carphone popped over 2% on the open after the firm reported a strong performance that goes somewhat against the recent trend among high street retailers,” said ETX Capital senior market analyst Neil Wilson.
“Far from the doom and gloom of Brexit and rocky household spending reported by some, the consumer environment seems to be largely holding up for the firm and it is responding well to the way consumer trends are moving, i.e. online.
“The fall in the pound does make life tough when everything you sell is made abroad, but with over a third of sales coming from the Nordics and Southern Europe the effect is offset to a degree. So a 5% rise in sales in European markets becomes a 20% jump in sterling terms and that helped lift profits.”
Dixons Carphone ups divi
Analysts and investors alike had expected Dixons to up its dividend, and that’s exactly what they got.
The retailer proposed a final dividend of 7.75p to take the total divi for the year to 11.25p, some 15% higher than the 9.75p it paid out last year.
Shares gained 1.2% to 300p in early deals.
--Updates for share price and analyst comment--