Almost 3,000 Dixons Carphone workers are facing redundancy after the electricals retailer announced plans to shut all 531 of its mobile phone shops.
Dixons Carphone was created through a £3.8 billion merger in 2014 that brought together household names Curry’s, PC World and Carphone Warehouse. It has 42,000 employees and 15,000 shops across the UK, Ireland, the Nordics and Greece.
However, six years on from its merger the retailer has announced it is shutting all of its smaller stores, representing 8 per cent of its entire estate, on the back of “unsustainable” losses of £90 million in its UK mobile business.
Carphone Warehouse has been hammered by a change in shopping behaviour as people increasingly use sim-only contracts and hold on to their smartphones for much longer as handset upgrades have negligible benefits.
Alex Baldock, 49, chief executive, said: “Customers are changing how they buy technology and Dixons Carphone must change with them.”
“With £90 million of losses 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.”
Dixons Carphone said that to date the coronavirus had not materially impacted trading and that supply constraints had been limited while online sales were strong. The retailer reported a boost in sales of fridges, freezers and laptops as people prepare to spend time at home. However, the retailer’s travel shops in airports have been hit hard and profits will be £5 million lower in that division.
Dixons Carphone said that it was aware its stores “could experience a significant reduction in sales in the months ahead” and it was ready to shift more stock to its online channels. The retailer provided reassurance that its debt facilities had “substantial headroom”.
There has been intense speculation that slumping mobile phone sales would mean Dixons Carphone would have to shut many more of its mobile phone shops after closing 92 in 2018.
The business said that it would take a £220 million hit on the restructuring of its mobile business and that it was planning to redeploy 1,800 Carphone Warehouse workers but expected 2,900 redundancies. Dixons Carphone said that the redundancies would cost £28 million as it was offering workers 75 per cent more redundancy pay than the legal entitlement. This works out to roughly £800 more than statutory minimum for a worker who has been with the retailer for three to five years.
