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Sunday 15 July 2018

Dixons Carphone profits expected to tumble amid data breach woes

The electricals chain is forecast to report a 23% decline in headline full-year pre-tax profits to £382 million.

Dixons Carphone is expected to report a fall in profits (PA)
Dixons Carphone is expected to report a fall in profits (PA)

By Ravender Sembhy, Press Association City Editor

Dixons Carphone is expected to report a sharp fall in profits next week as the retailer continues to reel from a mammoth data breach that saw millions of customer details hacked in a cyber attack.

The electricals chain is forecast to report a 23% decline in headline full-year pre-tax profits to £382 million, according to a consensus of City analysts.

HSBC’s Andrew Porteous said the figures have been dragged down by the poor performance of the company’s mobile phone division, as well as investment.

The results will come after a bruising period for the retailer.

In May, Dixons Carphone shares tumbled as the company warned that profits would continue to fall, and then it recently came clean over a cyber attack.

George Salmon, equity analyst at Hargreaves Lansdown, said: “These results come less than a month after a jarring profit warning saw the shares drop 21%, giving up the gains made earlier in the year, and a data breach.”

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New chief executive Alex Baldock (Oliver Holms/Dixons Carphone/PA)

The cyber attack saw 5.9 million customer bank card details and 1.2 million personal data records hacked.

The retailer behind Currys said that while 5.8 million of the payment cards targeted were protected by chip and pin, around 105,000 non-EU cards without chip and pin protection were compromised.

It piles further pressure on new boss Alex Baldock, who replaced the longstanding Seb James earlier this year.

Mr Baldock is grappling with challenges in the troubled mobile phone unit and has already pledged to shut nearly 100 Carphone Warehouse stores this year.

Hard-pressed consumers are holding on to older devices for longer and going sim-only, which has dented the group’s performance.

Mr Salmon expects the new boss to lay out the rest of his plans for turning the group around.

“While revenue continues to rise, margins are heading south. Turning this around while under pressure from Amazon et al will be a challenge.

“However, new CEO Alex Baldock is a man with a plan. He’s already committed to spending an extra £30 million on improving the in-store experience for customers, and he’ll be setting out the rest of his plans for turning the group’s fortunes around next week.”

Press Association

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