Dixons Carphone closes its airport business. Photo: Dixons
Dixon’s Carphone (DC.L) has had a good year of booming electronics sales and has decided to repay the government all the money it borrowed for its vacation program. However, it will close its airport operations.
The company’s shares fell around 5% on Wednesday morning.
The company noted its “very strong online growth” with online sales more than doubling to over £ 4.5 billion (US $ 6.2 billion) during the year.
This offset the closure of most stores in the UK and Ireland, as well as lockdown restrictions in the Nordic countries. The Group’s total electrical sales increased 14%.
The owner of Currys and PC World expects pre-tax profit for the full year to be in line with market expectations of £ 151 million. Net cash of £ 150m is also expected and it is on track to generate a cumulative free cash flow of £ 1bn by 2022/2023.
“Given the strong financial position, the group reimbursed all government support for the £ 73 million vacation paid to colleagues from the UK and India during the year,” it said.
Dixon’s shares plummeted Wednesday morning. Graphic: Yahoo Finance
The company announced that it has decided to close its airport operations, which “historically have contributed over £ 20 million to annual profits”.
“We do not expect passenger numbers to recover sufficiently to offset the UK government’s abolition of tax-free airside purchases from January 1st. This has led to the difficult decision to close this business. “
The announcement comes not long after the UK scrapped a system that allows tourists to shop VAT-free.
Dixons had stores in most of the UK’s major airports, including Heathrow, Stansted, Luton, Gatwick, Edinburgh, Glasgow and Manchester, to name a few.
For 2021/22 the group expects to end the year on net cash with investments of around £ 190m and exceptional cash costs of around £ 130m including the closure.
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“Profits don’t go unscathed … The government’s decision to abolish tax breaks on the airside for buyers means Dixons Travel is no longer a profitable business,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
The story goes on
“That will take about £ 20million in annual earnings and will come after the group is already digging through significant restructuring elsewhere in the business.”
But she added that “As a big-ticket seller, Dixons will breathe a sigh of relief that consumer spending is holding back his business.”
“With a nervous economic outlook, that was anything but guaranteed. The positive trends of the Christmas season have penetrated by the end of the fiscal year thanks to an impressive surge in online sales. The growth is testament to Dixons’ efforts to bring its customer service elements to digital platforms. “
Last year, DIxons announced it would close all 531 standalone carphone warehouse stores in the UK and cut 2,900 jobs in an effort to restart the loss-making cellphone business.
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