Dixons Carphone tipped as a “buy” on trading update

26th January 2016


As Dixons Carphone reports a Q3 trading update Graham Spooner, investment research analyst at The Share Centre, explains what it means for investors…

This morning Dixons Carphone reported the all-important Christmas trading update in which the group said like for like sales were up 5% for the 10 weeks ending 9 January. Investors should appreciate that these results beat the 4% rise the market had anticipated. Furthermore, the company also revealed that its full year profits before tax are likely to be slightly ahead of expectations coming in between £440m and £450m.

As one of Europe’s largest consumer electrical and mobile telecoms retailers, it is important to note that the group experienced a record day on Black Friday and a strong promotional period after Christmas. Subsequently, in all territories the company continues to gain market share, particularly so in UK mobile.

Investors should be aware that the company announced today that it would be closing 134 of its stores in order to bring its three main brands under one roof, but it was confident that the impact on sales and colleague numbers will be “neutral or better”.

Nevertheless, this is a solid trading update coming on the back of good results in December and as a result we recommend Dixons Carphone as a ‘buy’ for medium risk investors with a balanced portfolio. We believe the company should benefit from strong sales growth, the potential boost to retailers from the fall in the oil price and the benefits of scale provided by the merger.

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