Shares in Dixons Carphone Plc (LON:DC.) plunged in early trading Wednesday after it slashed its interim dividend amid a swing to a loss in the first half.
The FTSE 250 electronics retailer reported a pre-tax loss of £440mln for the period compared to a £51mln profit a year ago despite revenues climbing to £4.89bn from £4.87bn.
READ: Dixons Carphone reports lower quarterly sales despite World Cup boost
Like-for-like (LFL) revenues were also up 2% in the first half, while LFLs for the second quarter rose 4%.
The swing to a loss was mainly down to the firm booking non-headline charges of £490mln relating to non-cash impairments and goodwill.
The company has been struggling in recent months as slow mobile phone sales contributed to the closure on around 92 of its stores, while the share price has lost around 30% of its value this year following a string of profit warnings.
As a result, the group slashed its interim dividend to 2.25p per share from 3.5p a year ago, a decrease of about 36%.
Full year guidance unchanged
Despite the swing to a loss, Dixons left its full-year profit guidance unchanged, forecasting a pre-tax profit of £300mln, higher than last year’s profit of £289mln.
Alex Baldock, chief executive of Dixons, said that the group was “on the path to sustainable success” as it continued a strategy to refocus on four key areas; “two big profitable growth opportunities in online and credit; revitalising our mobile business, and giving customers an easy experience”.
He added that the group was also giving all of its colleagues £1,000 of shares.
The company is also pumping £200mln of higher capital expenditure into its restructuring programme as part of an acceleration drive which was to be funded by lower mobile network receivables as it moved its offer over to more SIM only contracts in line with changes in customer buying patterns.
The restructuring plan hit a previous snag in June when millions of the company’s customers had their card and personal details compromised in a data breach.
Black Friday trading likely to be as expected, says RBC
In a note to clients, analysts at Canadian bank RBC retained their ‘Outperform’ rating and 200p price target on the stock, saying they thought Dixons had “traded as expected over Black Friday” due to the maintaining of its full-year guidance.
“We maintain an Outperform rating on Dixons Carphone as although it faces structural headwinds in mobile and ongoing Brexit related currency risk, it should be able to benefit from its strong relative position in the UK and Nordic electricals and to release cash from the mobile business over time”.
Shares were down 9.2% at 137p.