Tech retail group Dixons Carphone has announced it will close all of its remaining standalone Carphone Warehouse shops because they lose money.
The mobile business of Dixons Carphone is expected to make a £90 million loss this year, as replacement cycles lengthen, the secondary market flourishes and people increasingly go online for their purchases. Something has got to give and the snowballing coronavirus situation adds considerable additional urgency to this move.
Dixons Carphone has been consolidating its retail presence for years now; combining the big Curry’s and PC World stores into a great big consumer tech retail destination. It merged with Carphone Warehouse back in 2014 and has special phone zones in all its big stores. The standalone Carphone Warehouse shops are generally tiny and only account for 9% of the group’s total UK selling space.
“Customers are changing how they buy technology, and Dixons Carphone must change with them,” said Alex Baldock, Group Chief Executive. “We’re underway with a fundamental transformation to do so. Today’s tough decision is an essential part of that, the next step in making our UK Mobile business a success for customers, colleagues and other shareholders.
Clearly, with unsustainable losses of £90m expected this year, Mobile is currently holding back the whole business. There’s never an easy time for an announcement like this, but the turbulent times ahead only underline the importance of acting now. I don’t underestimate how upsetting this news will be for our colleagues, and we’ll treat everyone with honesty, respect and care.
We want to keep as many of our Carphone Warehouse colleagues as we can, and expect to find new roles for almost 40% of those affected. We’re working hard to look after those colleagues we can’t find new roles for, financially and otherwise. We’ll pay enhanced redundancy, any bonuses, honour their share awards, and help them find new jobs through an outplacement programme.”
There was also a COVID-19 update. The company says it hasn’t been materially affected by the pandemic yet and that there have been few supply constraints. The one exception has been its Dixons stores in airports, which are empty because nobody is travelling. Dixon Carphone is joining the rest of the world in wondering how long its credit line will last.