Dixons Carphone sees £800m wiped off its market cap


Shares in Dixons Carphone PLC, one of Britain's most visible high street brands, slumped Thursday after the company warned that its profits this year would be lower than expected, largely because the fall in the pound since last year's vote to leave the European Union has prompted customers to hold on to their handsets for longer.

"And while it is too early to say whether important upcoming handset launches or the natural lifecycle of phones will reverse this trend", he added. 'Currency fluctuations have meant that handsets have become more expensive whilst technological innovation has been more incremental.

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

Shares fell more than 20% at the start of trading.

City analysts had expected the retailer to make a headline profit of between £460 million and £485 million this year, down from £501 million last year.

British stocks have seen some big individual declines over the past few sessions, with advertiser WPP (WPP.L) plunging almost 11 percent on Wednesday after cutting its sales target for the second time in six months.

This is down from analyst forecasts of between £460m and £485m and well below the £501m booked previous year.

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.

Like-for-like sales in the United Kingdom and Ireland rose four percent in the three months to June, but this was mainly thanks to growth in electricals, Dixons Carphone said.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Currency movements will have made new phones more expensive, but since the same should be true in the electronics business, which is faring well, we suspect the lack of significant innovation in recent models is a bigger problem".