Dixons Carphone to reveal rise in profits despite squeeze

Dixons Carphone CEO Seb James
Dixons Carphone CEO Seb James

Dixons Carphone is expected to show signs of wear from the squeeze on consumer spending, despite boosting profits, when it announces full-year results on Wednesday.

The electricals giant is set to reveal a 9% jump in annual pre-tax profits to around £487.5 million, slowing from a 17% rise to £447m in 2016.

Analysts warn the firm is likely to feel the strain from customers cutting back in the face of rising inflation.

Graham Spooner, analyst at The Share Centre, said: “Retailers in the UK have begun to report poor trading updates and express caution about their prospects.

“This may be the case with Dixons as the UK consumer feels the squeeze on real incomes from rising inflation through higher import costs and modest wage rises.”

The latest slew of official data suggests shoppers are starting to succumb to Brexit-induced price hikes, with household spending eking out its slowest quarter-on-quarter growth since 2014 in the first quarter of this year.

Inflation also hit its highest level in nearly four years in May while retail sales took a tumble last month, with increased prices “across all sectors” being pinpointed as the key driver behind the fall.

Dixons Carphone CEO Seb James said in January that the retailer is primed to ride out a slowdown and backed shoppers to keep spending with credit while borrowing is cheap.