Dixons Carphone takes essential next step in turnaround of UK Mobile business
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17 March 2020
Dixons Carphone takes essential next step in turnaround of UK Mobile business
• UK Mobile to be fully joined up with wider business as customers change how they buy technology
• All UK standalone Carphone Warehouse stores, representing 8% of Dixons Carphone’s total UK
selling space, to close
• Almost 40% of affected colleagues are expected to take new roles in the business, and other
colleagues will be fully supported
• Mobile to be sold through Carphone Warehouse shop-in-shops in 305 big Currys PCWorld stores
and online, giving customers the widest range of technology and services in one place
• Today’s changes are an essential next step towards making Mobile a sustainable and profitable
category, and staying on track with our longer-term transformation of the Group
• New mobile offer to launch later this year, offering customers flexibility, transparency, and value
• Positive cashflow in every year from Mobile restructuring, expected to total c.£200m – see pg.3
• The Group has not yet seen a material impact from COVID-19, though we are preparing for one –
see pg.3
• FY 2019/20 Adjusted* PBT still expected to be around £210m and net debt lower than last year –
see pg.4
Dixons Carphone is taking the next step in its transformation by joining up its UK Mobile operations with
the wider business as customers change how they buy mobile devices, connectivity and technology
overall.
The company will close its 531 standalone Carphone Warehouse stores in the UK and focus on
selling mobile devices and connectivity through its shop-in-shops in 305 big Currys PCWorld stores
and online.
The small standalone stores, representing 8% of Dixons Carphone’s total UK selling space, will close
on 3 April 2020. The business expects almost 40% (1,800) of affected colleagues to take new roles
internally, but sadly expects 2,900 redundancies as the businesses are brought together. Dixons
Carphone will go well beyond legal obligations in financial and other support for all affected
colleagues. There’s never an easy time for an announcement like this, but the turbulent times ahead
only underline the importance of acting now, to ensure a business fit for the future.
Today’s announcement is an essential next step in Dixons Carphone’s turnaround of its Mobile
business as part of its strategy outlined in December 2018, to return this part of the business, which
will make a £90m loss this year, to profitability. Customers are changing the way they buy mobile
devices and connectivity, replacing their handsets less often and buying them separately or as part
of more flexible bundles.
The company has taken action in response, including renegotiating its legacy volume commitments
with the mobile network operators: these will continue to roll off during FY21. As a result, the Group
will no longer be encumbered by historic sales volume targets. We will provide an offer that reflects
how customers are buying technology today and prepare for an even more connected 5G future that
goes well beyond the mobile phone.
Customers are also increasingly choosing to shop, not only with our large and growing online
business, but also in the company’s big 3-in-1 stores, featuring Currys, PCWorld and Carphone
Warehouse, which continue to grow market share and where customer satisfaction is sharply up.
These stores, which are 20 times larger than Carphone Warehouse standalone stores, allow
customers to see, touch and play with technology (electricals as well as mobile, services as well as
117 March 2020
products) and receive trusted independent advice from 17,000 expert store colleagues, all in one
place. The business has been investing tens of millions of pounds in these stores.
Dixons Carphone also remains committed to the mobile category. Current Carphone Warehouse
customers will be able to enjoy the same expert service in the big stores. The mobile offer will
continue to be available online – including at carphonewarehouse.com – and through phone sales
teams. Later this year, the business will launch its new mobile customer offer. This will better reflect
what customers want: flexibility, transparency, and value. This will include deals they can’t find
anywhere else, nationwide face-to-face advice, the best range of handsets from the biggest brands
and a wide range of tariffs and networks, underpinned by a market-beating price promise.
The changes being announced today do not affect the 70 Carphone Warehouse stores in the
Republic of Ireland or any operations internationally.
Alex Baldock, Group Chief Executive
“Customers are changing how they buy technology, and Dixons Carphone must change with them.
We’re underway with a fundamental transformation to do so. Today’s tough decision is an essential
part of that, the next step in making our UK Mobile business a success for customers, colleagues and
other shareholders. Clearly, with unsustainable losses of £90m expected this year, Mobile is currently
holding back the whole business. There’s never an easy time for an announcement like this, but the
turbulent times ahead only underline the importance of acting now.
I don’t underestimate how upsetting this news will be for our colleagues, and we’ll treat everyone
with honesty, respect and care. We want to keep as many of our Carphone Warehouse colleagues as
we can, and expect to find new roles for almost 40% of those affected. We’re working hard to look
after those colleagues we can’t find new roles for, financially and otherwise. We’ll pay enhanced
redundancy, any bonuses, honour their share awards, and help them find new jobs through an
outplacement programme. We recognise our responsibilities towards our colleagues and
communities, and intend to fulfil them.
But though this is by far the toughest decision we’ve had to make, it is necessary. We must follow our
customers. They want help with all technology, all in one place, and this trend is only going to
accelerate in a more connected 5G world.
So customers are increasingly heading, not just to our large and growing online business, but into our
big stores, where they can find all the experts and tech - mobiles, computers, TVs, smart tech,
appliances, gaming and all the rest - they need. But they can’t find all this in the small mobile-only
stores that are one twentieth of the size; they’re visiting these less and these stores are losing more
money as a result.
That’s why we’re committed to our more than 300 big stores around the UK, why we’re investing
tens of millions of pounds in them and in the thousands of expert colleagues who work in them. But
it’s also why sadly we have to close the small stores.
We remain committed to Mobile, as we’re showing by developing a new offer for customers,
retaining as many Carphone Warehouse colleagues as we can, and making Mobile a core category in
our big stores and online. As such, Mobile will be part of the one, joined-up business that customers
want and that’s essential for our transformation. Today’s announcement is about ensuring we’re
ready for that future, and staying on track for future success.”
217 March 2020
Financial Implications of Mobile Restructuring
• Mobile restructuring has no impact on any of the Group’s transformation or medium-term
guidance to deliver over £1bn of cumulative FCF up to and including FY 2023/24 – this includes all
exceptional cash costs related to the transformation
• Positive cashflow from Mobile restructuring of around £200m in total
• Restructuring expected to be net cashflow positive in all years
• Working capital inflow still expected to be over £500m
• Network debtor of £785m (as of 1H 2019/20) expected to mostly unwind over the next three
years
• Offset by associated working capital outflow of c.£200m
• Cash costs of Mobile restructuring to be around £220m
• These comprise property, people and other restructuring costs
• As previously guided, Mobile business will be at least breakeven by FY 2021/22
• Mobile still expected to lose £90m in FY 2019/20 (excluding revaluations)
• Losses expected to reduce slightly in FY 2020/21
• Breakeven by FY 2021/22 through elimination of associated Central and IT costs
COVID-19 Impact
The COVID-19 situation continues to evolve quickly and at this time its future impact is difficult to
assess. As always, our first concern is the wellbeing of our colleagues and our customers; we have
already taken actions to protect them and are prioritising their safety.
To date, the Group’s trading has not been impacted materially by COVID-19.
• Supply constraints have been limited to a few products and we have been, and continue to
be, able to work closely with suppliers to secure stock or source product from unaffected
areas.
• Our UK and International Electricals sales, which account for over 80% of group revenues,
have been resilient. Online sales have recently been strong and stores sales have held up
well across all territories, although our Greek stores will be closed, probably for at least two
weeks from 18 March. As customers prepare for time at home, fridges and freezers, small
domestic appliances and laptops have seen notable increases in sales.
• The main exception to this is our Dixons Travel stores which have been severely impacted by
a significant fall in passenger numbers in recent weeks. As a result, we expect there to be a
negative impact on this division’s profit of around £5m in the current year. This is
encapsulated in our current guidance.
As a Group, we are monitoring the situation closely. The turbulent times ahead underline the
importance of acting now and staying on track with our longer-term omnichannel transformation of
the Group. We are aware that our stores could experience a significant reduction in sales in the
months ahead and we are modelling a range of downside scenarios and planning accordingly. We
are ready to switch more fulfilment to our online and direct channels and we will manage our costs
and cash closely, including a tight control of capital expenditure if necessary. Our large bank
facilities have substantial headroom (on capacity and covenants) and over two and a half years until
maturity.
317 March 2020
Financial Guidance
We are currently on track to meet our FY 2019/20 Adjusted PBT guidance of £210m despite the
headwind to profit from Dixons Travel and currency translation, as well as for net debt to be lower
year-on-year, but we are aware the situation may change over the final weeks of the financial year.
We will give a further update on the medium-term guidance as the impact of COVID-19 becomes
clearer.
*See 1H 2019/20 Results for definition of Adjusted measures
Investor and analyst call
There will be a conference call for investors and analysts at 8.00am GMT this morning.
Dial-in details - UK/International: +44 (0) 20 7192 8000; passcode 3255377
Next scheduled announcement
The Group will publish its full year results on Thursday 25 June 2020.
UK & Ireland Store Portfolio
14 March 2020 Number of stores Selling space ‘000 sq ft
UK Currys PCWorld 309 5,542
UK Dixons Travel 29 37
UK Carphone Warehouse 531 471
Total UK 869 6,050
Ireland Currys PCWorld 16 207
Ireland Carphone Warehouse 70 40
Total Ireland 86 247
Total UK & Ireland 955 6,297
Notes to editors
Customer vouchers
• Following today’s announcement, we are offering 25% off phone accessories from a
Carphone Warehouse located inside a Currys PCWorld for all customers
• For customers approaching their upgrade window we are offering a £75 off voucher towards
any handset contract (new subscription or upgrade) bought in a Carphone Warehouse
located inside a Currys PCWorld
Enhanced redundancy
• We are offering a significant number of redeployment opportunities and will redeploy
almost 40% of colleagues into alternative roles
• However, for those for whom we are unable to find an alternative role or choose to leave us,
we will do everything we can to support them
• To this end, we are providing enhanced support of c.£28m for colleagues who leave us. This
represents a c.75% increase over and above statutory requirements
Colleague share scheme
• In December 2018 we launched a colleague share ownership scheme which saw every
permanent colleague with 12 months’ service granted an award of at least £1,000 worth of
shares vesting three years later
417 March 2020
For further information
Assad Malic Group Strategy & Corporate Affairs Director +44 (0)7414 191044
Dan Homan Head of Investor Relations +44 (0)7400 401442
Amy Shields Director of External Communications +44 (0)7833 360024
Susan Gilchrist, Tim Danaher Brunswick Group +44 (0)207 4045959
Information on Dixons Carphone plc is available at www.dixonscarphone.com
Follow us on Twitter: @dixonscarphone
About Dixons Carphone
Dixons Carphone plc is a leading omnichannel retailer of technology products and services, operating
through 1,500 stores and 16 websites in eight countries. We Help Everyone Enjoy Amazing Technology,
however they choose to shop with us.
We are the market leader in the UK & Ireland, throughout the Nordics and in Greece, employing 28,000
capable and committed colleagues in the UK & Ireland and 42,000 globally across the Group. Our full
range of services and support makes it easy for our customers to discover, choose, afford and enjoy the
right technology for them, throughout their lives. The Group’s core operations are supported by an
extensive distribution network, enabling delivery to stores and homes, a sourcing office in Hong Kong
and a state-of-the-art repair facility in Newark, UK.
Our brands include Currys PCWorld and Carphone Warehouse in the UK & Ireland and iD Mobile in the
UK; Elkjøp, Elgiganten and Gigantti in the Nordics; and Kotsovolos in Greece. Our Dixons Travel brand
has a presence across several UK airports as well as in Dublin and Oslo, and our services are provided
through Team Knowhow.
Certain statements made in this announcement are forward-looking. Such statements are based on current
expectations and are subject to a number of risks and uncertainties that could cause actual results to differ
materially from any expected future events or results referred to in these forward-looking statements. Unless
otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to
update or revise any forward-looking statements, whether as a result of new information, future developments or
otherwise. Information contained on the Dixons Carphone plc website or the Twitter feed does not form part of this
announcement and should not be relied on as such.
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