Shares in mobile phone and electrical goods retailer Dixons Carphone PLC (LSE: DC) remained largely unmoved today after the company reported a “roller-coaster” Christmas trading period.
The owner of Carphone Warehouse and Currys / PC World reported 7% like-for-like sales growth over the nine-week period. CEO Sebastian James credited the company’s strong availability, pricing, service and marketing efforts as key to driving market share across all their key territories.
Customers responded well to the company’s first ever “Black Friday” offering, although Mr James admitted that the promotion “impacted the three weeks that followed”, implying sales tailed off after the discount bonanza.
The US tradition has hit the UK high-street with a vengeance this year, and Mr James believes it is here to stay. On BBC’s Today Programme, he said: “We’re going to see it next year and its going to keep going forever.”
A successful Boxing Day sale saw demand pick up again, however, completing the erratic trading period.
Margins remained stable through the period, dispelling concerns that mega-discounting on Black Friday could dent profitability.
Following the busy period, management were confident enough to predict that profit before tax would be above market expectations and fall in the range of £355m and £375m.
Using the low end of management’s forecast, Dixons Carphone trades on a PE of 17 times, and it only pays a 1.36% dividend yield. For a business in such competitive fields, this seems demanding to me. I’d much prefer to own companies with durable competitive advantage that differentiate them from competition and allow them to flourish.