Yahoo Finance Dixons Carphone repays £73m in furlough money as electrical sales boom
Dixons Carphone (DC.L) had a good year, with electrical sales booming, and has decided to pay back the government all the money it borrowed for its furlough scheme. However, it will be shutting down its airport stores.
Shares in the company plunged roughly 5% on Wednesday morning.
The company touted its "very strong online growth", with online sales more than doubling to over £4.5bn ($6.2bn) for the year.
This offset the closure of most of it stores in the UK and Ireland, and lockdown restrictions in the Nordics. Total group electrical sales rose 14%.
The owner of Currys and PC World expects full year pre-tax profit to be in line with market expectations of £151m. It also expects to have net cash of £150m and it is on-track to generate £1bn of cumulative free cashflow by 2022/2023.
“Given the strong financial position, the group has reimbursed all government support for the £73m of furlough paid to UK&I colleagues during the year,” it said.
The company said it has decided to close its airport stores, which “historically made an annual profit contribution of over £20m.”
“We do not expect passenger numbers to recover sufficiently to compensate for the removal of airside tax-free shopping by the UK government from 1 January. This has led to the difficult decision to close this business.”
The announcement comes not long after the UK scrapped a scheme allowing VAT-free shopping for tourists.
Dixons had stores at most major UK airports, including Heathrow, Stansted, Luton, Gatwick, Edinburgh, Glasgow and Manchester, to name some.
In 2021/22 the group expects to end the year in a net cash position with capital expenditure of around £190m and exceptional cash costs of around £130m including the closure.
READ MORE: COVID pushes Sainsbury's to £260m loss
“Profits aren’t coming away unscathed... The government’s decision to scrap airside tax benefits for shoppers means Dixons Travel is no longer a viable business," said Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown.
"That will wipe about £20m off annual profits, and comes when the group is already chewing through sizeable restructures elsewhere in the business."
But she added that “as a seller of big-ticket items, Dixons will be breathing a sigh of relief that consumer spending is holding up for its business.”
“With a jittery economic outlook, that was far from guaranteed. The positive trends seen over the festive season have seeped into the end of the financial year, thanks to an impressive increase in online sales. The growth’s testament to Dixons’ efforts to transfer its customer service elements on to digital platforms.”
Last year, DIxons said it will close all 531 UK standalone Carphone Warehouse stores and axe 2,900 jobs as part of a plan to turn around its loss-making mobile phones business.
WATCH: What UK government COVID-19 support is available?
