Economy

Dixons Carphone sees £800m wiped off its market cap

Dixons Carphone sees £800m wiped off its market cap

It also said it would take a hit of between £10m and £40m as a result of the EU's decision to scrap mobile phone roaming charges, while profits would also be affected by the disposal of its Spanish business.

In an unscheduled trading update the electrical retailer said that it now expected to make a pre-tax profit of between £360 million and £440 million. "Whilst this investment will cause a shortfall in profits for our phone business we do however expect overall profit in our core retail operations to be in line with previous year supported by good progress in our UK & Ireland, Nordic and Greek electrical businesses, " he said.

James said he was encouraged by the United Kingdom performance in light of strong comparative sales following last year's European football championship. Provident is now leading other blue-chips higher, after the group's shares lost more than 66 percent earlier this week, after the company unveiled yet another profit warning, scrapped its payout to shareholders and announced that its chief executive was stepping down.

According to the BBC, CEO Seb James said the market had become "more challenging" in recent months, with the fall in sterling post the Brexit vote making phones more expensive.

The life of handsets is being extended by four to five months, he claimed, and it was unclear at this stage if launches of new devices from major brands or the "natural lifecycle" of phone purchases will reverse the trend. Analysts had been forecasting annual profits of £495m.

"We know that for half of the premium market, which is the bit that we like, the Apple base more or less rejected the iPhone 7", he said.

New phones coming to the market include Samsung Electronics Galaxy Note 8 "phablet", and a widely expected 10th anniversary iPhone from US rival Apple Inc, set to be unveiled next month.

"Whilst it is hard with the limited data now available to assess the precise impact of these changes, we now estimate that the net negative effect will be a range of between £10m to £40m this year", said James. "We think the iPhone 8 is a better phone and we will see our customer base returning".


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