Dixons Carphone

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Price Pence
As of 21:43 17 Sep 2019
Market cap. Pound sterling
1,433.19 million
As of 21:43 17 Sep 2019

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Pay revolt at Dixons Carphone

shoppers outside store
SOPA Images / LightRocket

As mentioned earlier Dixons Carphone issued a quarterly trading update today. That was ahead of its annual general meeting of shareholders where there has been protest vote against pay.

Almost a quarter of investors - 23.4% - voted against the remuneration report.

The company said it "acknowledges that a significant minority of shareholders did not support" the resolution on pay at the AGM.

It said its remuneration committee would "seek to consult further with shareholders to understand and discuss the specific rationale for any votes against our report."

"The remuneration committee recognises that the appropriate incentivisation of a new management team embarking on a major transformation of the business is a difficult judgement."

Chief executive Alex Baldock and new finance director Jonny Mason had their cash bonuses deferred into shares which will not vest for two years, the company said.

"The executives volunteered to do this as they were mindful that the performance of the business and the progress that is being made with the transformation is not reflected in the current share price and this was done in order to align themselves with shareholders."

Dixons Carphone bonuses deferred

share price

Board directors of Dixons Carphone have asked for their annual bonuses to be paid in shares and deferred for two years.

That is one of the items outlined in the annual report which says the decision was made because they were "mindful" that the results of their attempts to make changes to the business are "not yet reflected in the share price". (See chart above.)

As of next year, the company is planning to introduce such a deferral of bonuses, along with other measures including ending an ability to offer new-joiners pension contributions of 20% of their salaries.

Chief executive Alex Baldock was paid £1.7m, including the £619,000 bonus while new finance director Jonny Mason received £626,000.

They will however get their long-term bonus award of shares - based on performance over the next three years - of 250% of their salaries, the committee said. (Vodafone has made an announcement about this, see earlier post.)

This was after the "[remuneration] committee gave detailed consideration as to whether the overall size of the award should be scaled back in response to the fall in share price".

Among the factors taken into consideration was their decision to defer their annual bonuses.

Around 31,000 staff also received share-linked bonus awards.

Dixons Carphone 'to cut jobs'

woman in front of a shop
Getty Images

Retail Week says it has seen an internal memo showing that Dixons Carphone is to cut 141 jobs, the majority of which will be lost at its main head office in Acton.

According to an internal memo seen by Retail Week, roles will also be cut from offices in Poole, Loughborough, Warrington and in Ireland.

Last month Dixons Carphone reported a full-year loss and said its mobile phone arm would make a "significant loss" this year.

The struggle facing Dixons Carphone

BBC Radio 5 Live

Carphone Warehouse store
Getty Images

Phone customers are holding on to their phones for longer and that's one of the reasons Dixons Carphone gave for its annual loss of nearly £260m.

Retail expert, Clare Bailey, used to work as head of supply chain for Dixons and she said it's not just waning consumer confidence that's holding people back from upgrading their phones at Dixons Carphone.

She explained that network providers, such as O2 and Vodafone, provide High Street stores like Dixons Carphone with phone contracts to resell.

But, she said, those contracts may not always stack up well against competitors.

At the same time, resellers face competition from the networks themselves, who also have a High Street presence, and an increase in the number of people that are comfortable buying second-hand or refurbished phones.

Ms Bailey noted that poor results at Dixons' Carphone Warehouse arm weighed on the results of the group.

Dixon Carphone statement

Dixons Carphone says there is no change to its financial outlook from today's FCA fine as it had already set money aside for the possible fine from the Financial Conduct Authority.

Alex Baldock, chief executive, said: "We're obviously disappointed that Carphone Warehouse fell short in the past. But we're a very different business today; as the FCA acknowledges, we've made significant improvements since 2015. We're committed to stay on that trajectory, and to make sure all customers enjoy the right technology products and services for them".

BreakingCarphone Warehouse fined £29m

The Financial Conduct Authority has fined Carphone Warehouse £29m for failings that led to the misselling of mobile phone insurance and technical support known as Geek Squad.

It follows an investigation sparked by whistleblowing reports, the FCA said.

During the period under investigation (1 December 2008 to 30 June 2015) The Carphone Warehouse made regulated sales of Geek Squad policies worth over £444.7m, the FCA said.

Dixons Carphone boosted by overseas business

Dixons Carphone
SOPA Images / LightRocket

Dixons Carphone has reported a 1% like-for-like rise in revenues for the 10 weeks ending 5 January 2019, citing tough trading conditions in the UK.

The retailer was particularly hit by a decrease in mobile phones sales, which declined by 7% like-for-like.

However, the retailer was boosted by strong sales at its international stores, seeing a 5% rise in revenues like-for-like, as well as increased demand for supersized TVs and gaming, which offset losses in UK retailing.

As a result, Dixons Carphone said its full-year guidance of £300m remained unchanged.