Dixons Carphone profits down, outlook down, shares down 20%

The UK’s largest electricals retailer Dixons Carphone saw its share price plunge after its profits declined significantly and it warned they would continue to do so.

Dixons Carphone managed a like-for-like increase in revenues of 4% in the 2017/18 financial year but despite that saw its profits-before-tax plunge by 24% to £382. Furthermore the company warned that profits are expected to fall another 27% to £300 million in the next financial year. This outlook will have been what caused a sell-off of Dixons Carphone sales such that they were down 20% at time of writing.

“Eight weeks in the business have cemented my optimism about Dixons Carphone’s long-term prospects,” said Alex Baldock, who recently took over as Group Chief Executive after the last guy went off to run the Boots pharmacy chain. “I’ve found exceptional strengths, and though there’s plenty to fix, it’s all fixable.

“We’re number one in each of our markets, with people and capability no competitor can match. Our opportunity lies in making the most of those strengths, which we are nowhere near doing. And we must: nobody is happy with our performance today. We’re getting on with it, through a new leadership team and structure that’s promoted top talent, cleared away unnecessary layers and silos, and started to speed up decision-making.

In electricals, we’re focused on gross margin recovery. In mobile, we’re stabilising our performance through improvements to our proposition and network agreements. In both, we’ll work hard to improve our cost efficiency. We won’t tolerate our current performance in mobile, or as a Group. We know we can do a lot better.”

The Carphone Warehouse bit of the group seems to be especially struggling. The inference seems to be that Baldock isn’t happy with the dynamic between his company and the network operators, whose products and services he resells. It remains to be seen how strong his bargaining position is on this and the sudden decline of Phones4U illustrated what happens when resellers displease their suppliers.

As well as forecasting a further shedding of profit the Dixons Carphone outlook announced it would be closing down 92 of its 650 standalone Carphone Warehouse retail outlets. There has been talk of the smartphone upgrade cycle extending in reports and that’s unlikely to change, so we could be seeing the terminal decline of the UK’s last remaining independent mobile phone retailer.

Square stands up for small retailers in the mobile era

US mobile payment processing outfit Square reckons its new stand will empower small businesses in a way that traditional financial services have failed to do.

Square was launched to much fanfare, thanks to being founded by the bloke who also founded Twitter – Jack Dorsey, in the US in 2009. The first product was a little dongle that you plug into the headphone jack of your phone that allows you to take card payments on it by swiping the magnetic strip.

None of that made it over here for a while though, with Square making its first appearance in the UK via a contactless card reader last year. We met Jesse Dorogusker, Hardware Lead for Square, and he explained that’s because they didn’t support Chip and PIN until then, with the US still reliant on the magnetic strip or even (shudder) those anachronistic carbon paper counterfoil things.

Now Square is adding a stand to its UK offerings, which is designed to support a tablet and turn it into an instant point-of-sale terminal. Before Square Dorogusker spent years heading up the accessories division at Apple and that influence is clear in the design of the stand and the card reader, both of which go hard on the smooth white plastic theme.

The whole bright idea from day one was to utilise all the powerful technology that was being put in people’s hands thanks to Apple and Android, to help smaller businesses get access to the latest, mobile-powered, financial services.

Dorogusker SquareThe barriers to entry for SMEs to get into modern financial services are too high and I would say that’s on purpose,” Dorogusker (pictured) told Telecoms.com. “The mainstream industry sees too much risk in serving small business owners and as a result they’re very underserved, especially in technology transitions where the introduction of additional ways to pay like contactless.

“The smartphone industry has done an amazing job of making incredibly powerful devices widely available at shockingly low prices for how technologically packed they are. We’ve built complementary pieces of technology that connect to these amazing devices and give consumer-grade experiences to small businesses.”

It’s hard to argue with the premise. Imagine the amount of sales lost by, say, stallholders at a music festival because potential customers have run out of cash. The Stand product also comes with point-of-sale software to use on the tablet and even a swivel base so the retailer can present the sale to the customer for approval. As advertised it give small businesses the point-of-sale power of much larger setups and that seems pretty compelling.

Dorogusker also thinks this is something the telecoms industry needs to be aware of. People have challenges with connectivity and we’re now in a world that requires an online connection to make a payment, verify it and issue a digital receipt,” he said. “A lot of networks are focused on peak speeds and not as focused on coverage. 75% of Square’s customers in the UK are outside of London, maybe not near a bunch of cell towers, and they need coverage – not ten bars, one bar will do.

The Stand product launched in the UK today and is on a half price promotion for a month. We’re now off to the street market on Tottenham Court Road where you can buy a delicious Thai green curry and rice with just a tap of a phone. Now that’s progress.

All systems Go for Amazon bricks-and-mortar consumer IoT move

The opening of an Amazon physical retail store is cruel irony for its competitors and an inflection point for consumer IoT.

As if it’s not enough that Amazon has taken massive chunks of business from pretty much every retailer in countries where it operates, the etail giant now fancies a go at the one area it doesn’t currently dominate: bricks-and-mortar shops. It’s called Amazon Go and the first one has just opened its door in Seattle.

Amazon has decided not to issue a PR about the store, perhaps because it opened a year later than originally planned, but did invite plenty of media. Somehow Telecoms.com fell off the invite list, for which Jeff Bezos is presumably remorseful. Some reports lazily reflected on the irony of there being queues to a shop that is supposedly designed to eliminate queues, but most were cautiously excited at this fork in the consumer IoT road.

The big deal about Amazon Go is that it’s cashier-free. You simply enter the store, grab what you want, and leave. It’s all about your smartphone and sensors: you scan your Amazon Go app to enter the store and then a bunch of cameras and sensors that would make Big Brother green with envy track what you grab and walk out with. Your Amazon account is then automatically charged for what was in your possession when you leave.

The smartphone bit is pretty straightforward, although this does mark a milestone in the use of it as a physical shopping tool. The tricky bit is knowing exactly what you walked out with. The use of cameras and shelf sensors has the feel of an interim technology until consumer IoT ramps up and becomes affordable at scale. Once every product has its own embedded sensor then cameras will presumably be needed only for security and dispute resolution.

CNBC gave the store a go and found that one of the items it walked out with didn’t appear on the subsequent Amazon bill. They confessed the error immediately to Amazon, which knew a PR opportunity when it saw one and said ‘don’t worry about it’, as did the brand concerned.

This store is clearly designed as a prototype and a dress rehearsal. There will be flaws and the only way to fully stress test a new technology is to introduce it into the field. Giving away one or two yoghurts is one thing, but that error rate needs to be as close to zero as possible.

This also serves as a very conspicuous illustration of the concerns around automation. If this concept takes off then a lot of retail cashiers are going to lose their jobs and it’s not immediately obvious what fresh employment opportunities might be generated. A lot of the shelf stacking at Amazon warehouses is already done by robots so maybe that will be the case in bricks-and-mortar stores too, before long.