Dixons Carphone warns of squeezed margins as iPhone X boosts sales 

Carphone
Dixons Carphone’s revenues were boosted by the new iPhone X in the run up to Christmas

The new iPhone X  boosted Dixons Carphone’s revenues in the run-up to Christmas, but the retailer said a tough mobile phone market damaged its margins as it confirmed the departure of chief executive Sebastian James this morning.

The electricals seller revealed group sales growth of 4pc for the 10 weeks to January 6 as its top line was boosted by a 28pc sales surge in its Greek division and 9pc growth in the Nordics.

But revenues in  UK stores open more than one year were up just 3pc, compared with 6pc last year, and the company trimmed its full-year guidance, saying it would make a profit before tax of between £365m and £385m, down from a previous estimate of £360m to £400m.

Mr James, who will leave later this year to run chemist chain Boots, said he was “pleased” with the group’s overall performance but warned margins in its mobile phone business suffered due to "market conditions".  

Nonetheless like-for-like sales in the mobile business, which includes its Carphone Warehouse stores, rose 8pc, thanks to the "phasing" in of the iPhone X, Apple's top-end handset, which costs £1,349 on the retailer's cheapest 24-month contract.

He reiterated plans to shake up the division to make it “simpler [and] less capital intensive", which analysts have suggested is likely to mean store closures.

ETX Capital's Neil Wilson said: "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."

Mr James has led the company since it was created by the merger of Dixons Retail and Carphone Warehouse in 2014. He will be replaced by Shop Direct boss Alex Baldock, who is set to take over in April.  

Dixons Carphone’s chairman Ian Livingston said: "Seb has made an outstanding contribution to both the creation and success of Dixons Carphone. It is a much stronger company today than when he became CEO of Dixons Retail in 2012 with revenue, profit and customer satisfaction all substantially higher.”  

Mr Baldock said he was "privileged" to lead the company, adding: “Dixons Carphone is exceptionally well placed to help customers navigate the complex, fast-changing world of technology and mobile."

Shares in Dixons Carphone were up 1.4pc to 191p in early trading.

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