Dixons Carphone shares nosedive after bruising trading update

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Shares in Dixons Carphone plummeted on Thursday after the company slashed its full-year profit forecast blaming tough market conditions.

The retailer, which trades under the brands Currys, PC World and Carphone Warhouse, said that it now expects pretax profit for 2017 to be between £360m and £440m. Analysts in a poll conducted by Thomson Reuters had predicted an average forecast of £495m.

Chief executive Seb James said that currency fluctuations had made handsets more expensive. He also said that technical innovation had been “more incremental” meaning that people are putting off buying a new phone.

“While it is too early to say whether important upcoming handset launches or the natural lifecycle of phones will reverse this trend, we now believe it is prudent to plan on the basis that the overall market demand will not correct itself this year,” he said.

Shares in the company tumbled around 30 per cent after the announcement before recovering slightly to end the day around 20 per cent down. They had already lost around a third of their value this year, bruised by a jump in inflation battering consumer confidence.On Thursday the group said that its performance had also been impacted by the removal of European Union roaming charges.

“While it is difficult with the limited data currently available to assess the precise impact of these changes, we currently estimate that the net negative effect will be a range of between £10m and £40m this year,” the group said.

Joshua Mahony, a market analyst at IG, said that based on the trading update, “it is clear that some of the issues faced by the firm are going to be an ongoing rather than temporary concern”.

Figures for the first quarter of the company’s financial year, however, proved relatively robust with group revenue up 6 per cent.