Dixons Carphone earnings preview: where next for Dixons Carphone shares?
Joshua Warner June 28, 2021 11:39 AM
The Dixons Carphone share price has lost steam since April as concerns grow that the pandemic-induced boom in demand for tech could wane as lockdown eases and life starts to return to normal. We explain what to expect when the electrical retailer releases results later this week.
Dixons Carphone annual results: When will they be released?
Dixons Carphone will release full-year results on the morning of Wednesday June 30. This will cover the 12 months to the end of April.
What to expect from the Dixons Carphone results
Dixons Carphone has already revealed that like-for-like sales of electricals jumped 14% in the 51 weeks to April 24. The company has been able to capitalise on the increased demand for tech at home during the pandemic thanks to its strong online offering, with digital sales having grown by triple-digit figures, which helped cushion the sales lost from its stores having to be closed during lockdown and a severe drop in revenue and earnings from its mobile division.
The company said adjusted pretax profit should come in around £151.0 million, down from £166 million the year before. Importantly, that is after the £73.0 million of furlough money received from the UK government is repaid.
Analysts are expecting adjusted pretax profit to fall to £145.6 million. However, they are also expecting the company to report a reported pretax profit at the bottom-line of around £109.1 million compared to the £140.0 million loss booked the year before.
The company reacted swiftly to the radical overnight change that lockdowns introduced. It managed to capitalise on the shift online, with online sales of electricals more than doubling to over £4.5 billion – over 40% of its anticipated revenue this year. It closed its Carphone Warehouse stores and shifted its mobile operations into its Curry PC World stores, and shut its Dixons Travel shops that became unsustainable as international travel ground to a halt. Still, it signalled its commitment to an omni-channel offering by creating ShopLive, an online video shopping service that helps staff provide face-to-face advice and assistance for customers looking to buy online or in-store.
Investors will want to see how this is progressing. Notably, Carphone Warehouse has said it will bring all its lines under one brand by changing its name to Currys PLC by this October.
Dixons Carphone has proven resilient during the pandemic, but the company admitted at its interim results that it was ‘still nowhere near our full potential’. This places the spotlight on its outlook and how quickly it can return to -pre-pandemic levels of growth now that stores are back open and things are starting to normalise. One threat to this could be a potential drop-off in consumer spending on tech after splashing out on devices over the last year.
Investors will also be closely watching for news on the dividend after payouts were suspended to preserve cash when the pandemic erupted. Dixons Carphone decided against reinstating dividends at its interim results when it ended October with £269 million in net cash. The fact it is expecting to end April with around £150 million in net cash suggests shareholders may have to wait for payouts to be reinstated, especially whilst the restructuring is ongoing. It is expecting to book around £130 million in exceptional costs over the year to account for closing down stores.
Where next for the Dixons Carphone share price?
The share price had been trending higher since early August, hitting resistance at 160p in late April. Since then the share price has formed a series of lower highs and lower lows falling below the trendline resistance for the first time and hitting a low of 120p last week the 200 day ma.
Any move lower would need to break below the 200 sma at 120p in order for the sellers to target 105p a level which has offered both support and resistance at several points across the past six months.
Meanwhile, the MACD shows a receding bearish bias which is keeping the buyers hopeful. Any recovery would need to move back over the multi-month ascending trendline at 130p and the 50 sma at 135p to negate the near-term downtrend. A break above here could bring 145p back into target.
How to trade Dixons Carphone shares
You can trade Dixons Carphone shares with Forex.com in four steps:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for ‘Dixons Carphone’ in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.