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Paul Lipscombe
March 17, 2020
Retailer expects 2,900 redundancies
Dixons Carphone has announced that it will be closing all of its 531 standalone Carphone Warehouse stores as part of a major restructuring of its business.
The retailer will continue to offer mobile devices and SIMs through its Carphone shops-within-shops in its 305 nationwide Currys PCWorld stores.
Dixons Carphone said that around 40 per cent (1,800) of affected employees will take new roles within the organisation, but added that the changes would lead to around 2,900 redundancies.
Standalone Carphone Warehouse stores, which will close on April 3, represent eight per cent of Dixons Carphone’s total UK selling space.
The retailer said the move was unrelated to the Covid-19 outbreak, but due to the changing mobile market.
Group chief executive Alex Baldock hopes that the move will bring Dixons Carphone back to profitability, although he expects a £90 million loss this year.
He said: “Customers are changing how they buy technology, and Dixons Carphone must change with them. We’re underway with a fundamental transformation to do so. Today’s tough decision is an essential part of that, the next step in making our UK Mobile business a success for customers, colleagues and other shareholders. Clearly, with unsustainable losses of £90m 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.”
Baldock added that Dixons would attempt to provide financial support for employees made redundant.
“I don’t underestimate how upsetting this news will be for our colleagues, and we’ll treat everyone with honesty, respect and care. We’re working hard to look after those colleagues we can’t find new roles for, financially and otherwise. We’ll pay enhanced redundancy, any bonuses, honour their share awards, and help them find new jobs through an outplacement programme. We recognise our responsibilities towards our colleagues and communities, and intend to fulfil them.
“But though this is by far the toughest decision we’ve had to make, it is necessary. We must follow our customers. They want help with all technology, all in one place, and this trend is only going to accelerate in a more connected 5G world.”
CCS Insight director of consumer and connectivity Kester Mann said the decline of physical retail space in favour of online sales was a “logical move”.
“Carphone Warehouse has been caught in the unfortunate crosshairs of lengthening mobile phone replacement cycles and ongoing apathy on the UK high street,” he said. “It has been clear for some time that something had to give in its business.
“As well as saving costs, the company has an opportunity to offer a best-in-class Web-based retail experience that could differentiate from rivals.
“With more than twice as many people expected to keep their current mobile phone for longer than their last one, footfall has declined and mobile phone retailing is tougher than ever. Carphone Warehouse had no option but to make some major changes.”
Dixons’ most recent financial results, for H1 2019, saw an 18 per cent decline in mobile revenue, while overall profits fell from £60 million to £24 million.