Carphone Warehouse cuts losses by 70% in Ireland
Latest accounts show sales were flat at €111m, but generated gross profit of €29.1m
Carphone Warehouse said its sales were in line with expectations, as it had refocused its business on selling more profitable products. Photograph: Dara Mac Dónaill
Mobile phone chain Carphone Warehouse’s Irish arm cut losses by 70 per cent to €3.5 million as cost reductions kicked in last year, the latest figures show.
The Carphone Warehouse Ltd sells phones and technology services such as broadband through 74 Irish stores, where it employs 650 people.
Its latest accounts show that in the 12 months ended April 29th 2017, the company cut losses by 70 per cent to €3.52 million from €12 million over the previous 12 months, aided by two-years of cost reductions.
Sales were flat during the period at €111 million, but generated a gross profit before operating expenses and once-off charges of €29.1 million, ahead of the €28.8 million earned in the 12 months ended April 29th 2016.
The company said that its sales were in line with expectations, as it had refocused its business on selling more profitable products.
Mark Delaney, managing director of parent group, Dixons Carphone Ireland, which also owns Curry’s PC World, noted that the business performed well, increasing gross profit against the relatively flat sales.
“We have made steady progress to reshape the business and reduce losses to help create a sustainable and successful Irish-run business,” he said.
Legacy of property bubble
However, Mr Delaney warned that excessive rents, many a legacy of the last decade’s property bubble, posed a challenge to the chain.
“We remain significantly challenged by the unsustainable barrier of high rental tenancy agreements,” he said.
“Many of these agreements remain out of kilter with the current economic climate.”
Mr Delaney added that Carphone Warehouse was continuing to reshape the business.
“The real benefit of our company remodelling and rationalisation will be seen in the coming financial year and into 2019 and beyond, particularly if we can further reduce costs associated with high legacy rent agreements,” he said.
Part of the fall in losses was down to a once-off gain of €2.1 million. This resulted from the company re-assessing the costs of the Dixons-Carphone Warehouse merger.
The merger resulted in a €3.65 million exceptional charge to Carphone Warehouse’s 2016 accounts. Following the re-assessment, it wrote €2.1 million of this back to its profit and loss account.
The company ended its financial year with a net debt of €8.8 million. It had €10.35 million in stocks and its debtors owed it €19.7 million on the balance sheet date.