Dixons Carphone Plc (LON:DC.) has confirmed the departure of chief executive Sebastian James as it narrowed its full year profit guidance range.
James, who has led the company for six years, is leaving at the end of the financial year to take the helm of UK chemist Boots. He will be replaced by Alex Baldock, currently the boss of online retailer Shop Direct PLC.
Shares rose 1.20% to 190.20p in morning trading.
"It has been an enormous privilege to lead this business and to work with such passionate and committed colleagues over the last few years,” said James.
“Together, I think that we can be very proud of the profound transformation that we have seen in Dixons Carphone and the sound footing, customer affection, and place in the world that it now enjoys.”
James joined Dixons Retail in 2008 before moving up to the role of chief executive in 2012. He led the company through its merger with Carphone Warehouse in 2014.
His departure follows a profit warning in August when the firm said sales have been hit by the number of customers holding onto their handsets for longer as rising inflation and stagnant wage growth weighs on disposable incomes.
Following the resignation of James, the company brought forward the release of its Christmas trading update a day earlier. It said it now expects full year pre-tax profits between £365mln and £385mln, compared to a previous guidance of £360mln to £400mln.
The average consensus forecast for pre-tax profit is about £377mln.
Christmas trading
In the 10 weeks to 6 January, revenue rose 6% on a like-for-like (LFL) basis as its mobile business received a boost from the launch of the iPhone X. A delay to the release of the iPhone last year had hurt first half sales.
READ: Investors dial in on Dixons as it holds divi steady and boasts about record Black Friday
“Our UK mobile business had a strong sales period helped by better iPhone X availability and we grew share in SIM free and SIM only over the period,” said James.
The best performing regions were Greece and the Nordics, which delivered LFL revenue growth of 23% and 11% respectively.
LFL revenue in the UK & Ireland rose 3% but gross margins continued to be “challenged” in phones due to a weaker pound.
READ: Dixons Carphone's Andrew Harrison returns to Carphone Warehouse to lead turnaround
“Looking forward we continue to keep our antennae twitching for any material change in consumer behaviour, but remain relentless in our focus on providing the best value, choice, and service to our consumers, " James said.
“For the remainder of this year we have an early Easter, a new Samsung phone and the first week or two of our World Cup promotion to look forward to, and work continues on redefining and refocusing our Carphone Warehouse business to be a simpler, less capital intensive model.”
The company expects net debt to reduce to about £250mln by the year end and cash outflow for the year is estimated to reach £50mln, compared to a previous forecast of £40mln.
Store closures on the horizon?
Neil Wilson, senior market analyst at ETX Capital, said the remarks about making the group a simplier, less capital intensive model "most certainly means for store closures.
"As previously stated, with over 700 Carphone stores in a total estate in excess of 1,000 across the group, there is ample opportunity to rationalise the Carphone estate and improve profitability in mobile while still retaining a dominant market position," he said.
"Mr Baldock has great experience in turning around Shop Direct and tends to favour an online-first approach – he may cut the store footprint far more radically than Mr James would have done."
Henry Croft, research analyst at Accendo Markets, said the Christmas trading sales figures and the announcement of a new chief executive will be seen as a positive by shareholders.
"The narrowing of FY guidance (bringing down upper-end of range) is the obvious exception to positive tones struck in the company’s statement, with continued margin pressure on its mobile segment being the primary agitator, but it is largely being ignored in favour of the many positives from this morning’s release," he said.