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Dixons Carphone will cut costs by £200 million

Paul Lipscombe
December 17, 2018

Online rivals and lack of upgrades by consumers lead to £440m losses

Dixons Carphone group CEO Alex Baldock now plans to cut costs by £200 million, improve the online experience and put a sharper focus on customer service.

A “difficult year with a number of challenges” has cost Dixons Carphone half year losses of £440 million compared with the profits of £54 million a year ago.

Online shopping and a slowing handset market contributed to the losses with Carphone Warehouse closing 92 stores earlier in the year.

CCS chief of research Ben Wood said: “Carphone has been very clear it would be a tough year and these figures suggest that. People’s approaches to buying handsets has changed. They are also holding onto their phones longer.”

IDC senior research analyst Marta Pinto says a lack of differentiation from other providers had an impact.

“Telcos do a good job attracting customers to stores with aggressive offers. Carphone has struggled to differentiate from other retailers and telcos.”

uSwitch’s Ernest Doku says consumers are more “savvy” when purchasing handsets online.

The company was hit by the summer data hack that saw over 5.9 million bank cards and up to 10 million personal data records hacked.

“The loss of confidence from the hack will have had a meaningful impact,” says Doku.

Baldock said: “There are headwinds and uncertainty facing any business serving the UK consumer. We’ve had our challenges, and our plan will take time.”

Pinto says innovation and investment can help Carphone, while Doku says there are opportunities that can overcome these losses.

Doku added: “There could potentially be a consumer churn with the introduction of 5G which will mean consumers will have to buy 5G enabled phones to benefit from the service.”

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