Black Friday drives Dixons Carphone's forecast beating Xmas

British electricals and mobile phone retailer Dixons Carphone raised its full-year profit forecast after Christmas trading beat expectations, having been given an early boost by Black Friday deals in November.

While rivals, such as Argos, have complained that the U.S.-imported Black Friday sales day on Nov. 28 was unhelpful as it pulled Christmas sales forward and then created a lull in spending, Dixons Carphone said the pattern of shopping worked well for it.
Finance Director Humphrey Singer said Black Friday was now its busiest day of the year, surpassing Boxing Day, Dec. 26.
"The shape of this key (Christmas) trading period certainly changed but we like big, planned promotional events and were well prepared and able to adapt," he said on Wednesday.
As Europe's second largest electrical goods retailer after Metro's Media-Saturn, Dixons Carphone has the clout to negotiate deals with suppliers on specific Black Friday products so it can protect profit margins.
It places particularly large orders with global manufacturers and in some instances gets suppliers to devote their factories to one model, for a short period, bringing down costs, both for it and the supplier.
The savings can then be passed on to consumers through promotional deals, giving Dixons a competitive advantage over rivals who took big hits on some products they sell all year round.
Samsung televisions, De Longhi coffee machines and Bose audio speakers were big Black Friday sellers.
"Careful planning ahead of Black Friday to work with suppliers on targeted, not blanket, promotions allowed the business to deliver a positive surprise on gross margins," said Investec analyst Alistair Davies.
Media-Saturn does not operate in the UK and other rivals, such as Argos, have a much broader range of products.
Argos and John Lewis have said retailers may try to rein in Black Friday promotions this year.
However, Singer sees little prospect of that. "I think it's here to stay ... and is something we need to plan for and get used to."
Dixons Carphone, formed by last year's merger between Dixons Retail and Carphone Warehouse, said it expected a 2014-15 pretax profit of 355-375 million pounds ($539-$569 million) compared with a previous forecast of 354 million pounds.
Shares in Dixons Carphone, up 21 percent over the last three months in anticipation of a decent Christmas, were up 0.5 percent at 445 pence at 1332 GMT, valuing the business at 5.1 billion pounds.
It said sales at stores open for more than a year were up 7 percent in the nine weeks to Jan. 3, while gross margins were stable.
Like-for-like sales rose 8 percent in its main UK & Ireland division, where it trades as Carphone Warehouse, Currys and PC World, ahead of analysts' average forecast for a rise of 5 percent. Top sellers included coffee machines, juicers, high speed blenders and ultra high definition televisions.
Sales on the same basis were up 6 percent in the northern Europe division, versus expectations of a 3 percent rise, but fell 4 percent in southern Europe.
($1 = 0.6592 pounds) 

Source : Reuters
Time     : 2015-01-22

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