Dixons Carphone has released a trading statement that shows the UK businesses roaring ahead with like-for-like sales (LFL) growth of 10.0%, the Nordic business generating 4.0% LFL growth and Southern Europe treading water. The overall Group outcome was +8% LFL growth. The UK performance was driven mainly by improved market share in mobile phone sales.
The Carphone Warehouse Services division had earlier announced a deal with Sprint to open and manage mobile communications stores in the USA, echoing the highly successful venture that predecessor company Carphone Warehouse had with Best Buy Inc.
CEO Sebastian James described the first quarter performance as very encouraging. There are some tougher comparatives ahead; the iPhone 6 launch last year was a "startlingly successful"" event and Black Friday was huge last year. Nonetheless he expressed confidence that Dixons Carphone would have another successful year.
In electricals and home technology, the CurrysPCWorld chain has captured the mainstream market, with John Lewis taking the top end and Argos scrabbling around at the lower end. The internet is the real competition though and it is a constant challenge to prevent customers treating the stores as demonstration outlets for Dixons' online competitors.
The group is coping very successfully with the challenges, with post-merger integration expected to deliver sooner than first planned. Hopefully, sales synergies look to be emerging as Carphone's mobile device abilities are brought to bear on the CurrysPCWorld estate, with the group citing strong market share gains in Q1.
At the time of the merger, CEO Sebastian James talked about typical homes then having an average of four internet connected devices, but moving rapidly toward more like twenty devices per home in the future. Mr James wants to sell you those extra devices.
As home heating systems become controllable by mobile apps and our cars talk to our phones, whilst wristbands monitor our health, more and more of us will be in need of someone who can calmly explain to us what on earth is going on. The group's vision is to be that advisor, the one who enables mere mortals to make sense of the digital world, in a way that normally can only be done by a teenager. In the process of course, they're going to sell us lots of stuff, whilst earning commissions for steering us towards apps that will make our lives run better, if only until the software needs an upgrade.
After the demise of Comet and Phones 4U, Dixons Carphone have a great opportunity to capture the lion's share of a fast growing market. The shares trade on circa 15.5x consensus earnings for the current year and analysts are expecting growth to be above average, with earnings growth in double digits for each of the next few years.
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