Wednesday 21 August 2019

'Dixons and Carphone have been in the Irish market a long time and are committed'

A retail industry veteran, Mark Slater has a big job ahead of him to make Dixons Carphone's Irish arm a profitable contributor to the retailing giant

Manchester-raised Mark Slater, the head of the Dixons Carphone Ireland business. Photo: Maxwells, Dublin
Manchester-raised Mark Slater, the head of the Dixons Carphone Ireland business. Photo: Maxwells, Dublin
John Mulligan

John Mulligan

In 1988, towards the end of Margaret Thatcher's reign as UK prime minister, a then 17-year-old Mark Slater harboured ambitions of being a stockbroker. It seems a somewhat unlikely career choice for a north of England lad raised in Manchester, whose father was a haematologist with the National Health Service, and had a stay-at-home mum.

The whirlwind '80s, where Thatcher was arguably responsible for the deregulation of the British financial markets, had helped fuel growth in the City and cemented the social separation of the once industrial north from the wealthier, southern UK.

It was the era of the obnoxious cockney TV character 'Loadsamoney', created by comedian Harry Enfield, but of course also the Black Monday stockmarket crash of 1987.

"My first son was born when I was 17," says Slater (44). "I'd wanted to go into stockbroking. I liked numbers and data and really enjoyed that. Jonathan was born, and I said: 'Yeah, I'll get a job'." That first position was with Great Universal Stores in Manchester, which was later bought by the wealthy Barclay brothers (the billionaire twins who battled Irish businessman Paddy McKillen for control of iconic London hotels including Claridges and the Connaught) and eventually became Shop Direct. By 21, Slater was seeing the world as a buyer with his next employer.

"I loved the marketing and the buying. I got to see where all the products came from, and looking at new categories. At the heady age of 21 I was sent off to Hong Kong, Thailand, the Philippines. A lot of UK retailers had Hong Kong buying offices. You go over there as a starry-eyed kid and you see all this stuff. You see goods move from the factory on the way to the store. It was fascinating."

And so began a retail journey that this year led to his appointment as the head of Dixons Carphone's operations in Ireland. There are a total of 27 PCWorld and Currys stores here, and another 78 standalone Carphone Warehouse shops, 12 outlets focused on the new 'ID' mobile network launched by the group this year, and three 'Samsung Experience' stores. Carphone also has a presence in Harvey Norman outlets.

Slater has some task on his hands. A difficult retail environment here has seen both Dixons - which owns the PCWorld and Currys brands - and Carphone Warehouse struggle on the bottom line.

Revenues on the Dixons side have been stable and getting cash through the tills was important during the downturn, but getting that part of the business back on a break-even basis will probably count as one of Slater's single biggest jobs while he's here (he was previously strategy and transformation director at the Dixons Carphone).

Dixons' £3.8bn (€5.4bn) merger with Carphone Warehouse last year was a deal that some analysts were unsure would deliver, but which has so far proved them wrong. The enlarged group - the UK's biggest electrical retailer - reported a 1.8pc rise in revenue to £9.9bn (€14bn) in the 13 months to May 2, and a 21pc leap in pre-tax profits to £381m (€540.6m). Slater was on the merger team, and so has deep understanding of the group.

Part of his role a few years ago was driving significant management change at the group, where an underlying trait was bristling competition between different Dixons units, even at the expense of each division. And that was at a time when Dixons' own survival prospects were very much touch and go.

"There had been separate structures all with their own managing directors and their own fiefdoms," recalls Slater.

"The view of the world then was that that created competitive tension. But it got to stage where the business needed to do something different. The cost base was way too high, so we had to collapse that structure and took out a lot of the duplication and came up with different ways of working. We had a really intense period of about three years of changing the business and by 2013 we were in pretty good shape."

As a standalone business, Dixons generated revenue of €150.5m in Ireland in the 2014 financial year, down just very slightly on the previous year. But it made an operating loss of €3.7m compared to a €3.6m loss the year before.

Carphone Warehouse posted turnover of €119.6m in Ireland in its 2014 financial year, compared to €105.4m the previous year. It made a €2.7m operating profit and a €7.3m loss respectively in those years.

"Ireland is a challenging retail market," concedes Slater, who has also previously worked with Disney and Argos owner Home Retail. "Both Dixons and Carphone have been in the market for a long time and are absolutely committed to it. We've made a lot of investments, but we had to work out how to bring the businesses together and at the same time we had to work out what the role of ID was, and how it would sit with the retail business that we had."

Slater insists that both businesses have performed reasonably well on a sales basis over the past few years, despite the difficulties in the market.

"The challenge for both businesses is really around the operating model and the cost base we currently operate on," he explains. "We're looking at how we become more efficient as a business. Fundamentally, our whole agenda has to be a growth one. The way to actually get the business into a much better and profitable position is to grow the top line."

Investing in its online offering and locating Carphone Warehouse 'shops within shops' in its Currys and PC World outlets, are a "big part of the growth agenda".

"We have to work out how successfully leverage the scale we have within the group," he adds. "But we've got to work out how we also become more fleet of foot, more innovative, more creative."

According to company filings, the last time the Dixons division made a profit in Ireland was in the 52 weeks to the end of May 2008, when it returned a €10.5m operating profit on €209m of revenue. Since then, it's generated accumulated losses of about €37m.

Carphone Warehouse's performance makes for equally unflattering reading. Its profit in Ireland in its 2014 financial year followed an operating loss of €7.4m in 2013, a €7m loss the year before and a €3m loss the year before that. In 2010 it lost €2m.

So when does he think the Dixons unit will be making money here again?

"That's a good question," he says good-naturedly. "Over the next three years, we want to see Ireland contributing significantly to the UK and Ireland profit number. We've got big ambitions for the next three years."

Slater also says that no decision has yet been made on how many Currys and PCWorld stores the group envisages having here within the next few years, especially as more business migrates to online.

With Carphone Warehouse, the ambition lies in part in the ID mobile network.

It was launched in Ireland in August (and a few months earlier in the UK), and the group is ultimately targeting a 5pc share of Ireland's mobile market. That's not too dissimilar to the size of Tesco's share of the mobile market here. It has 6.1pc share, based on figures that exclude mobile broadband and machine-to-machine subscriptions. On that basis, there are 4.8m mobile subscriptions in Ireland, according to telecoms regulator Comreg, giving Tesco 293,000 subscriptions. On the same basis, 5pc would equate to 240,000 subscriptions.

Slater insists the launch has been a success, but has panned out a bit differently than envisaged.

"We expected it to be more of a pre-pay than post-pay proposition," he says. "But we found that the business is much more post-pay than we expected it to be, which really good.

"And we're doing a lot more business in the higher end tariff space. We'd set ourselves up to really push data, and a lot of people are buying into that."

In management speak, Slater says that ID "over-indexes" on young professional males. "They tend to be the guys with the money."

Meanwhile, Slater and his family are still based in the UK, in Milton Keynes, but he hopes to ship everyone over to Ireland soon.

And no doubt stockbroking would never have been this much fun.

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