COVID-19 Business Update

RNS Number : 2336L

Dixons Carphone PLC

29 April 2020

 

29 April 2020

COVID-19 Business Update

Dixons Carphone issues the following update prior to entering the close period for its full year results for the 53 weeks to 2 May 2020, which are scheduled to be announced on 25 June 2020.

· Group focused on three priorities:
o  Keeping our colleagues and customers safe
o  Helping our customers
o  Securing our future

· Sales strong in all open channels as we provide vital products during the crisis
o  UK&I online accelerated further, recovering around two-thirds of lost store sales
o  Nordics trading strong across stores and online
 

· Year-end net debt expected to be around £300m

· Additional £266m RCF secured, resulting in over £1bn of unutilised committed facilities at year end

· The Board has decided not to pay a full year dividend
 

Alex Baldock, Group Chief Executive

"I'm humbled by the speed and skill with which thousands of our colleagues have reacted to this crisis in safely helping millions of customers and securing the business's future. I can't thank them enough. We're setting new social distancing and hygiene standards that allow us to provide vital help to customers through the lockdown, to keep them connected with loved ones, their families fed, clean and entertained, work from home and home-school the kids. We've given extra help to vulnerable older people, in partnership with Age UK, and prioritised the NHS.

This vital role is reflected in customer demand: wherever we've been open, our sales performance has been strong. In the Nordics, our stores continue to operate to high social distancing and hygiene standards, providing a successful blueprint for how our UK stores can safely reopen as soon as Government so decides. And we're innovating; launching live video shopping for online customers and contactless shopping in-store.

We're being prudent in conserving cash, have secured additional funding, and can plan for the future with confidence.  We remain committed to our longer-term transformation and will use everything we're learning through this crisis to build a better business for customers, colleagues and shareholders."

Trading Update

Like-for-like growth1	11 Weeks to 21 Mar	5 Weeks to 25 Apr	16 Weeks to 25 Apr	52 Weeks to 25 Apr
UK&I Electricals	10%	-16%	2%	1%
- UK&I Online growth	23%	166%	66%	22%
International	5%	16%	8%	4%
Nordics	5%	24%	11%	4%
- Nordics Online growth	15%	98%	40%	20%
Greece	0%	-40%	-12%	2%
- Greece Online growth	2%	597%	146%	56%
Electricals	8%	-3%	5%	2%

__________
¹ Like-for-like growth calculated on 52-week basis to 25 April 2020. Full year results will cover 53 weeks to 2 May 2020.

The UK&I and Greek stores that are closed would normally have been expected to contribute a further c.£400m of sales in this financial year. In UK&I Electricals, our online business has recovered around two-thirds of the lost store sales as we have adapted to changing customer needs, maintained our unambiguous price promise, continued investment in delivery and carried on growing our range for customers.

In April we have seen strong demand for home office equipment including computers and home networking as people work and communicate remotely. Gaming and TV sales have also been strong. In kitchen products, refrigeration and food preparation including bread makers have sold particularly well. The latter part of the month has seen increased sales for personal care products and fitness trackers.  In contrast, sales for other major domestic appliances have fallen as home moves stall and the imaging market continues to decline.

During this period, we closed our 531 standalone Carphone Warehouse stores in the UK as the Group took the next step in its transformation as customers change how they buy mobile devices, connectivity and technology. The stores closed 11 days earlier than planned. As a result of these closures our UK&I Mobile sales will no longer be disclosed on a like-for-like basis; total sales will be reported in full year results.

Liquidity Update

The Group has extended its committed debt facilities with an additional £266m RCF and now has total committed facilities in excess of £1,350m. At the year end the Group will have net debt (excluding IFRS16 lease liabilities) of around £300m and access to over £1bn of unutilised committed facilities.

Measures to preserve liquidity were announced on 26 March 2020 and included Government cost support, discretionary spend control, capital expenditure reduction, working capital control and Government support of tax payment delay.

These combined measures put the Group in a robust position. We do not foresee needing to access any additional liquidity, and we expect to comply with bank covenants unless substantially all of our operations are required to close for an extended period.

Full Year Dividend

Given the uncertainty and need to build for the future, the Board has decided not to pay a full year dividend for the current year. Dividend payments will not be resumed until our standby debt facilities have been cancelled, which can be done at any time and is something we would plan to do when there is more certainty over the future.

Operational Update

Since the start of this crisis we have focussed the business relentlessly on three priorities: keeping our colleagues and customers safe, helping our customers and securing our future.

Keeping Our Colleagues and Customers Safe

There is no bigger priority than our colleague and customer safety and we have been taking further steps to protect them during recent weeks while meeting high customer demand for vital products and services. It is through these measures we are able to ensure social distancing, maintain the highest standards of customer safety, and continue to deliver to customers the technology they need. Our colleagues have risen to this challenge brilliantly. We have been clear that we will not ask colleagues to do anything that they are not comfortable with.

Stores

· In line with Governments' regulations, the Group's stores in Greece closed on 18 March and all UK and Ireland stores closed on 24 March. All Nordics stores have remained open throughout the period, except for four stores located in shopping centres in Denmark and three stores in Norway due to low footfall. 

· In Nordics stores we have ensured colleague and customer safety through measures including protective barriers for cashiers, contactless payment, pre-paid pickups and increased cleaning and hygiene actions. 

Online

· Across the group, the online operations have remained open. To ensure delivery colleague safety, shift patterns have been adjusted to reduce potential congestion and rosters are designed to keep colleagues in the same pairs and the same vehicle wherever possible. Among many measures, our colleagues are equipped with masks and full safety equipment, deliveries are done on a no-contact basis. We ask customers to keep 2 metres from our colleagues while they are delivering to, or working in or near, their homes.  

· We have reduced the repair and installation services offered. We are only repairing vital items such as washing machines, cookers or refrigeration units. Similarly, we currently only offer installation for cookers which are necessary for customers and their families to eat.

· Our distribution centres have introduced extensive measures to keep our colleagues safe, including social distancing in all areas, one-way systems, signage and tannoy reminders, regular cleaning and sanitisation of all frequently touched surfaces.

· We've consulted a range of organisations including the British Retail Consortium as well as Environmental Health Officers, which are supportive of the measures we have put in place.

Head office and customer service

· All UK contact centres and offices have enabled working from home for all colleagues through providing set up laptops and increasing VPN access. Our UK head office building has been closed since 20 March with continuity of operations maintained.

Helping Our Customers

Our customers need us, especially now. We are providing vital goods to the public, helping millions of people to sustain this essential lockdown. This is important technology that helps them stay connected with their loved ones through mobile phones and tablets; fridges and cookers to help them feed their families; washing machines to keep them clean; providing laptops so parents can work from home and children can be home-schooled.

We are helping customers as an online-only retailer in the territories where our stores cannot open. We are taking every step to ensure that older and vulnerable customers who need us can get our help and get it safely.

· We have been prioritising requests for tablets, mobile phones, laptops, webcams, headsets and chargers for all NHS Trusts and individual hospitals in a bid to offer critical patients the opportunity to stay in touch with friends and families.  

· To safeguard the wellbeing of older and vulnerable customers, we have joined forces with our charity partner Age UK so they can maintain their vital support to vulnerable older people. We have already donated hundreds of items of technology and are working together at pace to find more ways to help older people during this crisis.

· F urther support for vulnerable older people is being offered by ID Mobile which is offering all existing customers over 70 years old free and unlimited data for the 12-week isolation period advised by the government.

· Our Nordic stores have:

o  Special opening hours for vulnerable and at-risk people.

o  Drive-in Click and Collect

o  Increased use of contactless payments

o  Introduced "live shopping" where customers can get help and shop via a videolink from an in-store colleague

o Donated unused processing power from c.1,500 in-store Gaming computers to Stanford University's Folding@Home project to tackle Covid-19.

Securing Our Future

We remain committed to our strategic transformation and we are determined to continue to create an even better business as we emerge from this period of uncertainty.

· We continue to have very strong and mutually beneficial relationships with our suppliers. Our normal inventory commitment is 4-14 weeks in advance, depending on product. Since the crisis began we have decreased both order intake and the aggregate commitment time while maintaining availability well ahead of the market. Where offered, we have accepted extended payment terms from some of our large, global suppliers.

· We have furloughed over 16,500 store, supply chain and support colleagues across territories who are temporarily not working due to Covid-19. All UK&I furloughed colleagues will be paid at 80% of their salary, with the company making up any difference beyond the Government subsidy limits.

· All Executive and Board members have taken a 20% pay reduction and other senior leaders have taken a 10% pay reduction, effective from 5 April, and there will be no corporate bonus payment in UK&I this year.

 

This release contains inside information

Next scheduled announcement

The Group is scheduled to publish its full year results on Thursday 25 June 2020.

For further information

Assad Malic	Group Strategy & Corporate Affairs Director	[phone]
Dan Homan	Head of Investor Relations	[phone]
Amy Shields	Director of External Communications	[phone]
Tim Danaher	Brunswick Group	[phone]

Information on Dixons Carphone plc is available at www.dixonscarphone.com  

Follow us on Twitter: @dixonscarphone

About Dixons Carphone

Dixons Carphone plc is a leading omnichannel retailer of technology products and services, operating through 950 stores and 16 websites in eight countries. We Help Everyone Enjoy Amazing Technology, however they choose to shop with us.

We are the market leader in the UK & Ireland, throughout the Nordics and in Greece, employing 24,000 capable and committed colleagues in the UK & Ireland and 39,000 globally across the Group. Our full range of services and support makes it easy for our customers to discover, choose, afford and enjoy the right technology for them, throughout their lives. The Group's core operations are supported by an extensive distribution network, enabling delivery to stores and homes, a sourcing office in Hong Kong and a state-of-the-art repair facility in Newark, UK.

Our brands include Currys PC World and Carphone Warehouse in the UK & Ireland and iD Mobile in the UK; Elkjøp, Elgiganten and Gigantti in the Nordics; and Kotsovolos in Greece. Our Dixons Travel brand has a presence across several UK airports as well as in Dublin and Oslo, and our services are provided through Team Knowhow.

Certain statements made in this announcement are forward-looking. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Information contained on the Dixons Carphone plc website or the Twitter feed does not form part of this announcement and should not be relied on as such.

 

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