Dixons Carphone is set to overhaul its business model after a sluggish performance in its six-monthly financial report.
The company declared a fall in pre-tax profit of 60.4%, compared with the same period last year; while the drop in UK profit was even steeper, a fall from £130 million to £34 million, a hefty 74.3%.
In response, the company has decided to look at how it’s going to be selling phones. said Seb James, the company CEO. “As we said in August, the UK postpay mobile phone market is tougher, with a combination of higher handset costs and relatively incremental technology growth continuing to cause customers to hold on to their handsets for longer and some to choose a SIMO contract in the meantime.
SIMO contracts
Dixons Carphone’s story reflects what’s happening in the other parts of the UK.. According to a survey from GfK last month, customers are moving away from handset deals and opting for SIMO contracts.
James said he recognised that the business model had to change. “We recognise that the performance of the mobile division needs addressing, and are taking action to adapt our model. We will update the market on these developments in due course, but we believe that we can, over time, reduce the complexity and capital intensity of our mobile business model, and increase the simplicity and profitability of what we do.”
One of the issues that caused problems for the company was the late appearance of the Apple X, as this pushed some of the sales back into the following quarter, said James.
