8th Oct 2014 11:53
LONDON (Alliance News) - Recently merged Dixons Carphone PLC Wednesday said it will spend more on marketing among other measures aimed at grabbing customers of now-defunct rival Phones4U, and said it will get a "minimum" of GBP80 million of annual synergies out of its recent merger of Dixons Retail and Carphone Warehouse.
At an investor meeting in Oxford, company executives said the enlarged company's main business opportunities include the explosion in connected devices and the opportunities afforded by Phones4U's recent exit from the market.
Phones4U went into administration last month after major mobile operators said they'd no longer sell phones and price plans through the company. That came just weeks after electrical goods retailer Dixons completed its merger with mobile phone retailer Carphone Warehouse.
In 2010, Dixons had started opening Phones 4U store-within-a-store outlets in some of its Currys and PC World stores, but the concessions were due to end next year as Carphone Warehouse and Phones 4U were competitors.
However, Dixons Carphone executives said Wednesday that the retailer will have 159 Phones4U stores converted into Carphone Warehouse concessions within its own stores by the end of October. It is also taking on at least 800 ex-Phones4U staff. It said it will also now re-evaluating some of its retail locations, as it will consider putting new stores nearby to where Phones4U stores used to be.
Dixons Carphone has extended the store-within-a-store format since its merger, and is now placing Carphone stores within PC World and Currys. It has already launched 20 store-in-stores within PC World and Currys units across the UK, with a total of 30 expected to be up and running by Christmas. It said it will then pause for peak Christmas trading, and continue with expansion after that.
Its store-within-a-store format allows shoppers buy a range of products, ranging from the latest smartphone to kitchen appliances like kettles and toasters, all under one roof.
When the two companies merger earlier this year, management said the focus for the business would be "the internet of things", 'smart' internet-connected objects such as washing machines and fridges controlled by smartphones.
After merging only two months ago, Dixons Carphone said Wednesday that while it's not upgrading its target for GBP80 million in recurring synergies from its merger, it said it's "definitely the minimum it can achieve" and it expects to reach the target a lot faster than previously expected.
Last month, Dixons Carphone said like-for-like sales were up across the Dixons Retail business in the fiscal first quarter, but were down 6% in the Carphone Warehouse business due to difficult market conditions in Spain and a particularly strong performance across the business a year earlier.
The retailer did not update on current trading during the presentation, although Chief Executive Sebastian James said that the business is in "robust, good shape".
"We're trading well. Our integration is progressing well. It's early days, but so far so good, and we have tangible plans for future growth," said Finance Director Humphrey Singer at the presentation.
Dixons Carphone is set to launch a pricing app by year end, which will show customers on-the-spot comparisons against John Lewis, Argos and online appliance retailer AO World.
Dixons Carphone said it will publish its second-quarter trading and interim results on December 17.
Dixons Carphone shares were trading fairly flat Wednesday early afternoon, up 0.1% at 368.90 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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