back to article Dixons Carphone smarting from £440m loss as it writes down goodwill on mobile biz

Dixons Carphone today reported a £440m statutory loss at the halfway stage of its fiscal '19 after writing down the goodwill of its mobile division, sending its shares tumbling by almost 12 per cent. The results for the 26 weeks ended 27 October were filed along with the "vision" from new broom Alex Baldock, which includes …

  1. Charles Calthrop

    hate it. use it

    I remember the days I used to buy new handsets all the time, back in the day. When new cameras and features came out. Nowadays, I find the efforts to persuade me to upgrade laughable. 'We have 4 new pixels', 'We have a new chip which makes browsing 2% faster'. Big deal. Hard luck carphone warehouse.

    1. Random Handle

      Re: hate it. use it

      >I remember the days I used to buy new handsets all the time, back in the day. Nowadays, I find the efforts to persuade me to upgrade laughable.

      Hence planned obsolescence, welded-in batteries and short support cycles. No persuasion is now necessary.

      1. Charlie Clark Silver badge

        Re: hate it. use it

        Hence planned obsolescence, welded-in batteries and short support cycles. No persuasion is now necessary.

        Arguably we had more of that during the years of the two-year refresh cycle for the reasons listed in the original post. While there are some arguments for glueing and soldering everything, these should be countered by the right to repair. But even then most of us will choose to replace stuff because it's cheaper…

      2. juice Bronze badge

        Re: hate it. use it

        > Hence planned obsolescence, welded-in batteries and short support cycles. No persuasion is now necessary.

        So... sales are dropping because the manufacturers have come together in a conspiracy to make our old handsets unusable?

        I have to say, that plan doesn't seem to be working too well, so far...

    2. Gene Cash Silver badge

      Re: hate it. use it

      Even better: "We got rid of the headphone jack"... "we have a stupid notch"... "battery replacement? hah!"

      Now you get a new phone only when you smash the old one, and I buy online for the best price and the ability to check out specs at leisure without a salesperson breathing down my neck. Plus it doesn't help that the models you want, are not carried in-store anyway.

      1. wolfetone Silver badge

        Re: hate it. use it

        Best upgrade I made this year was buying a Nokia 105. Battery lasts a week, I know it'll work whenever I need it to, I can make calls (when Tesco Mobile's O2 network doesn't go down) and I can text.

        But BEST. OF. ALL....

        I can play Snake when I'm having a dump, all for the low low price of £15.

        1. Anonymous Coward
          Anonymous Coward

          Re: hate it. use it

          >I can play Snake when I'm having a dump, all for the low low price of £15.

          don't drop it down the toilet or you'll be playing dodge the brown snake.

          1. Commswonk Silver badge

            Re: hate it. use it

            don't drop it down the toilet or you'll be playing dodge the brown snake.

            Steady on... I've only just had my lunch. Probably true of lots of others as well.

            But seeing you started it I'll suggest "going through the motions" if you drop your phone in the wrong place.

        2. fmboots

          Re: hate it. use it

          What! It costs you £15 to take a dump...

          1. wolfetone Silver badge

            Re: hate it. use it

            "What! It costs you £15 to take a dump..."

            I've got a big arse so I go through a lot of bog roll.

  2. djstardust Silver badge

    I take it

    Nobody high up in the company has actually tried buying a handset from them.... or looking at thr Trustpilot reviews.

    The company is an utter shambles.

    1. Credas Silver badge

      Re: I take it

      Indeed; it was noticeable that "Dixons talked up four initiatives or "levers of value" that it will concentrate on to improve the entire business" seemingly without thinking of the novel idea that their sales staff should have the slightest effing clue about the products they're selling.

    2. Anonymous Coward
      Anonymous Coward

      Re: I take it

      I usually find that whichever handset they have on display I want to actually buy is never in stock so I end up getting one delivered the next day from Amazon for the same price (or cheaper.)

      Mind you, I only buy sub-£100 landfill Android handsets so I'm probably not in their preferred demographic with not enough profit margin for them.

    3. katrinab Silver badge

      Re: I take it

      I have bought handsets from them in the past, not recently though. The last one was a Galaxy Note 2 back when that was the latest model. They were fine, cost was about the same as online retailers, I got the box in my hand without having to wait around for delivery and deal with useless couriers, and the product was usual Samsung quality.

      1. Anonymous Coward
        Anonymous Coward

        Re: I take it

        >and the product was usual Samsung quality.

        It burst into flames a day later?

    4. ad47uk

      Re: I take it

      For most part i agree with you, but last year I got myself a Hauwei p10 lite from our local car phone warehouse inside currys and i went in, told them the phone I wanted, i did not want any extras, no services as I was already on a sim only contract and no insurance.

      Got in and out in around 10 minutes. so if you know what you want it is fine.

      i only went there as the phone was the same price as online.

  3. Mystic Megabyte Silver badge
    FAIL

    Excludes.......

    Their crap web-site lets you register but when you want to buy and checkout it's "UK mainland only".

    As they knew my post code why did they waste my time? I hope that they sink!

  4. Anonymous Coward
    Anonymous Coward

    What's a carphone

    What's a warehouse for that matter?

    1. Rameses Niblick the Third Kerplunk Kerplunk Whoops Where's My Thribble? Silver badge
      Mushroom

      Re: What's a carphone

      What's a warehouse for that matter?

      Oooh, I know that one! Those are places where Amazon's rudimentary SkyNet precursor is practising disabling human beings with Bear Repellent!

  5. Anonymous Coward
    Anonymous Coward

    Carphone warehouse used to be quite good.

    Carphone warehouse used to be quite good until they were taken over but then got worse and worse as the ethos of their new owners was forced on them.

    1. MrMerrymaker

      Re: Carphone warehouse used to be quite good.

      Odd, I worked for them pre takeover and they sold all the call centre and IT jobs to IBM's India plan purely to save costs, and put my entire department in the dole queue.

      Maybe you mean as a customer... Though I spoke to enough dodgy, lying branch managers I doubt that too!

    2. ad47uk

      Re: Carphone warehouse used to be quite good.

      They was no better then, i had a right go at the manager in our store as he more or less said a friend was having problems with her phone because she was a blond. the fact that this blond have more qualifications than he would even know about.

  6. tiggity Silver badge

    Times change

    A long time ago their name meant something, but to a whole swathe of younger UKers "carphone" draws a blank

    .. and Warehouse is a misnomer as limited range of stock

    Other half got a phone from them a few years ago & will never go to them again, sales person was too busy pressurizing for (I assume more commission) phone deal instead of phone & carrier OH wanted.

    Thus most recent OH phone purchase due to phone death was made online (albeit with benefit of a same day physical collection (Argos as they had similar price to other online deals and advantage of picking it up that day in a store a few miles away instead of waiting)

    I'm guessing lots of other people put off by past experiences (just like PC World) & unlikely to visit again unless for "emergency purchase". When you have a bad rep it's hard to improve it (even if you do improve) as there's plenty of alternatives around and bad customer service gives unhappy customers & less chance of a repeat purchase.

    1. A Non e-mouse Silver badge

      Re: Times change

      Before internet shopping really took off, someone once told me that Argos had one of the best customer satisfaction ratings on the high street as they didn't have any high pressure sales staff.

      1. DavCrav Silver badge

        Re: Times change

        "Argos had one of the best customer satisfaction ratings on the high street as they didn't have any high pressure sales staff."

        I think this is as good a place as any for a rant about high-pressure sales staff. My bloody staff canteen is now trying to upsell people, by asking each and every customer if they want a soup or a dessert with their main. At the till. After I've walked past the dessert and soup stations without stopping. So no, I didn't want one then, and I still don't.

      2. ad47uk

        Re: Times change

        they still don't have high pressure sales, they do ask if you want insurance, but a quick no thank you seems to do the trick.

    2. tokai

      Re: Times change

      Re. “their name isn’t relevant anymore to kids”, to be fair that was always the case!

      Some of their first adverts were:

      “Car phone warehouse - we don’t sell car phones and we don’t have warehouses”

      1. Anonymous Coward
        Anonymous Coward

        Re: Times change

        @tokai; “Car phone warehouse - we don’t sell car phones and we don’t have warehouses”

        Was that really one of their first slogans? It rings a *faint* bell, but it doesn't seem as long ago as 1989, which is when Wikipedia says they started.

        Back then the first proper (1G analog) mobile networks- and proper "yuppie-style" mobile phones- had been around for a few years, but from what I've read manufacturers were still selling phones designed for in-car use until the early 90s. (Maybe the bulk and battery capacity issues of early handhelds still made in-car systems a worthwhile idea for some people?)

        I'm guessing this was a hang over from the old-style "0G" radio "car phones" that were around from the 1940s(!) to the mid-80s (and I assume so-called because there's no way in hell one of those things was going to be suitable for carrying on foot).

        But I'd have thought that even by 1989 the idea of a car phone would have seemed at least obsolescent and a poor choice of name for a future-looking company. Or perhaps not, who knows?

  7. James 51 Silver badge

    And importantly, "[credit] is profitable in its own right".

    I still remember one analyist saying that Ford was a loan company that happened to have a car businesss attached to it. There is certainly more profit in the 'service' side than in the hardware.

    1. Phil Kingston Silver badge

      Yep, I think that sums it up. I'm increasingly seeing Oz networks giving add-ons e.g. Beats headphones on a contract plan as part of the credit arrangement. Makes sense to me - tie customer in for 24 months, load up their credit contract with as much product as you can.

  8. trev101

    It's not wholly Carphone Warehouse fault. I am still using an iphone from 2015 and new phones prices, change of functions and Apple's greed puts you off from getting a new one. My phone still does everything I want to do.

    1. Charlie Clark Silver badge

      It isn't really any of the sellers' fault: the market has matured as it was bound to one day. Apple got an extension as it switched to bigger screens but the novelty of that seems to be wearing off too.

    2. tiggity Silver badge

      Our household phone purchases are purely to replace phones that breakdown / get stolen.

      No need for latest & greatest phone, just one fit for purpose (so on last purchase one of the must haves was a "proper" headphone socket, so a bonus was lots of over hyped & over priced phones instantly off the long list)

      1. Simon Barker

        Doesn't that just highlight that perhaps reg readers aren't the most fertile soil for flagship handset prices?

        The rest of the market will catch up to that attitude eventually but on the bright side it does ensure a healthy supply of last year's model.

        1. katrinab Silver badge

          I'm pretty sure we are the most fertile ground for flagship handset prices. I had a smartphone before most people had any type of portable communication device. If we don't see the benefits of the latest model any more, then nobody does.

          1. DavCrav Silver badge

            "I'm pretty sure we are the most fertile ground for flagship handset prices. I had a smartphone before most people had any type of portable communication device. If we don't see the benefits of the latest model any more, then nobody does."

            That means we were the fertile ground, but that's back when new phones did new things. Now they are just slightly larger and with slightly better cameras and denser pixelled screens, no thanks. People who know about technology are customers of good technology, not incremental upgrades.

  9. Version 1.0 Silver badge

    End of Year Tax loss?

    Certainly the markets are changing, but it sounds like an accounting maneuver for tax reasons.

    1. Ledswinger Silver badge

      Re: End of Year Tax loss?

      sounds like an accounting maneuver for tax reasons.

      Unlikely. Tax accounts and published GAAP accounts are completely different, and since 2015, goodwill amortisation hasn't been claimable against corporation tax, so I'm confident that writing it down in one fell swoop would equally not be allowable. My money's on the exec bonus scheme driving this.

      What's going on here formally is that they're admitting that the CPW merger was on unduly favourable terms to CPW, and by writing off the goodwill from the balance sheet they reduce the total value of the balance sheet, which helps with some performance ratios such as "return on capital employed". But I suspect the main thing is that by taking the pain this year, profits in future years will be higher by the amount they would otherwise have amortised, and the executive incentive scheme should pay out more generously next year. As there's a minimum profit threshold before bonuses are paid, chances are they thought "we're getting stuff all bonus this year, so what else can we incur as a cost now?"

      Also, investor memories are short, and when in the next financial year the share price rises on a big jump in net profit, few will remember that c£33m of the increase is down to this goodwill writeoff. As beneficiaries of share incentives the board will be pleased if the share price improves.

      Overall though, it isn't a proper "big bath" provision because in the longer term I can't see the Dixons Carphone mobile shops surviving, so there will be further closures, writedown of leases and business termination costs. Whilst the board continue to cling to the idea that there's value in selling a modest range of handsets at inflated prices on the high street, they aren't going to sort out the CPW rump.

      1. DavCrav Silver badge

        Re: End of Year Tax loss?

        Indeed. A writedown of goodwill usually means 'we really screwed up that takeover'. It doesn't tell you whether the problem was in the high cost of the meal or in the digestion of it, but either way it came out the other end as shit.

  10. M7S

    "Includes handing the 30,000-strong workforce £1,000 worth of shares"

    Is that each, or just an insultingly small incentive per person?

    1. Ledswinger Silver badge

      Re: "Includes handing the 30,000-strong workforce £1,000 worth of shares"

      Is that each, or just an insultingly small incentive per person?

      Per permanent employee, although over the next three years. Total cost is £10m, against current market capitalisation of £1.65bn, so it isn't as though Dixons Carphone is on the threshold of becoming a mutual.

  11. Anonymous Coward
    Anonymous Coward

    ...or maybe....

    ....a lot of customers are beginning to realise that their spiffy new smartphone is the modern equivalent of a strap on tracker -- once the sole prerogative of convicted criminals.

    *

    Oh wait.....I forgot....no one cares about privacy today....there must be some other reason for poor sales.

  12. Anonymous Coward
    Anonymous Coward

    Maybe they should change their name?

    Why would I go to a warehouse full of carphones? I mean who has a carphone these days?

    1. Lost it

      Re: Maybe they should change their name?

      I bought an old Jaguar. There in a little slide out tray on the dashboard I found a Motorola Star tac handset. GSM only unfortunately.

      I have one!

      What's my prize?

  13. Doctor Syntax Silver badge

    I was surprised to find that they had the best price on a particular motherboard I was looking for. However, there's still a chance for them to screw up: it was on their business site and they won't sell unless you set up an account.

  14. Lost it

    Last time we tried to buy a phone from CPW, (my daughter wanted an iphone thing) the so called sales assistant got the phone out, put a sim card in it (which I wasn't happy about, it's now not a new phone any more...) Then opened this form up. I said "What's that for?" She said "Oh we have to do this for every phone we sell."

    I said "No you don't, you have it in stock, we have the money. Simple transaction. You hand it over, we pay, we walk out of the store".

    Oh no, she wasn't having any of it. My daughter could see I was starting to get a bit annoyed. "No sir, to sell this phone to your daughter we HAVE to fill in this form and she has to sign it".

    I exploded... "Ok. Last chance. You have the phone. We have the money. Hand phone over, we pay and that's feckin it".

    "No sir"

    "Goodbye".

    That's why they are stuffed. They don't have a clue about customer service.

    1. Anonymous Coward
      Anonymous Coward

      "That's why they are stuffed. They don't have a clue about customer service."

      Please believe me, many of us DO have a clue about customer service. The form in question is mandated by the FCA because CPW offers an optional insurance/support service, therefore under FCA regulations [i]all[/i] customers must be made aware of it. However the customer is perfectly at liberty to decline to comply; the form has an "opt-out" option for just this situation. IOW the above should never have happened.

      I'm sorry you had such a poor experience, but please don't tar us all with the same brush. Any sales bonus {commission} we receive is heavily dependant on customer satisfaction scores, so it's in our interest to give customers what [i]they[/i] want. And no, our "reward" is not based on handset price... I'll currently pocket more selling you a Samsung J6 on most networks than an iPhone XS, but if you don't [i]want[/i] the J6 it's self-defeating. Unhappy customers don't pay..... simples!

      [anon 'cos some of the above may be construed as "commercially sensitive" and therefore in violation of company social media policy]

      1. paulf Silver badge
        Meh

        @AC Sorry I disagree on this. I appreciate this is your job and not mine but my experience differs. I bought an iPhone from Apple direct; they offer AppleCare+ (clearly an insurance product) and I wasn't asked to complete/sign any form stating I'd been offered insurance nor that I'd declined that offer (I didn't buy AppleCare+). I also bought an iPhone from John Lewis*. They didn't get me signing forms for any reason (insurance or otherwise) they reserved it over the phone (with only my phone number, no account or payment required) and when I went to the store they took my money and gave me the sealed iPhone box like the OP expected CPW to do.

        Frankly, this smacks of the overzealous implementation of a simple regulation into overly complicated store policy. If the FCA requires this a citation of the regulation would be useful. Really, this form screams data harvesting operation to me.

        *I bought an iPhone SE shortly after Apple discontinued them back in September. I called my local Church of Jobs asking if they still had stock left. They did but the guy I spoke to told me to try JL first as they were selling off their stock for £100 cheaper which he couldn't match. Apple get a lot of criticism (plenty of it justified) but I can't fault that kind of service!

        1. Anonymous Coward
          Anonymous Coward

          "@AC Sorry I disagree on this. I appreciate this is your job and not mine but my experience differs. I bought an iPhone from Apple direct; they offer AppleCare+ (clearly an insurance product) and I wasn't asked to complete/sign any form stating I'd been offered insurance nor that I'd declined that offer (I didn't buy AppleCare+). I also bought an iPhone from John Lewis*. They didn't get me signing forms for any reason (insurance or otherwise) they reserved it over the phone (with only my phone number, no account or payment required) and when I went to the store they took my money and gave me the sealed iPhone box like the OP expected CPW to do."

          Maybe down to who underwrites the policy, or distance-selling vs in-store? In CPW's case the underwriter is Aviva. The FCA definitely do random checks with our customers to confirm that the rules have been followed, and if we're found non-compliant the company can be fined and, in the most serious cases, the employee can lose their job and/or be prosecuted under law.

          As for the "data harvesting" accusation, GDPR already requires me to ask every customer whether they wish to receive communication from CPW. If I ignore their choice I lose my job; if my employer does likewise they stand to be fined ££££. This form however is not marketing but statutory information required by an industry regulator to ensure compliance.

          "If the FCA requires this a citation of the regulation would be useful."

          I believe it's encapsulated here: https://www.handbook.fca.org.uk/handbook/COBS/2/1.html, specifically sections 2.1.1 & 2.1.3.

          n.b. in case of doubt, in no way do I defend the behaviour of the colleague cited in the OP's post. If he/she was in my store their ears (and possibly other orifices) would be bleeding,

  15. John Lilburne Silver badge

    *gack*

    I have a old Nokia that is some 15 yo that still works and a 5 yo Samsung that is on its last legs because most of the apps don't work anymore, and google keeps wanting to update something amd crashes it. I expect this to become the new way to get people to upgrade: trash their apps, keep crashing their device, and bullshit that a 5 yo device is obsolete. Arseholes.

  16. Chronos Silver badge
    Holmes

    The novelty has worn off.

    We've reached "peak shiny." Most of the people who would upgrade their kit every six months have been run over due to wandering about in the road transfixed by the damned things.

  17. TrumpSlurp the Troll Silver badge
    Paris Hilton

    Unexplained attraction

    For some weird reason (probably the colour scheme) I feel more comfortable in CFW shops than other more garish stores,

    Given that, the sales force are usually seriously thick but that often comes with a box shifting operation with slim margins. Not much sign of the arts graduates who are allegedly selling fries in McDonald's.

    My purchases won't keep them afloat, though. From memory it was a MiFi some years back when both phones couldn't get data service, and recently a £15 handset for minimum functionality voice and text.

    Currys/PC World is now one of the very few places where you can see/touch/feel white goods and they usually have at least one competitive offer.

    Also good for working out which laptop size and layout works for you, if this is your first laptop (took a friend in for a once in 10 years purchase).

    Phones and PCs are something of a dead area for consumers now anyway as they are "good enough" until something breaks.

  18. andy gibson

    This is why Dixons isn't great any more. They've moved on, technology isn't fun anymore, just boring and functional, and we just want them to be like they were:

    https://www.flickr.com/photos/bradford_timeline/sets/72157628427029211/

  19. Greencat

    Dixons rather than Carphone Warehouse, innit?

    Given some of the appalling customer service I experienced from Dixons in the 90s, there's no way I'd go back to any store with that moniker above the door. I suspect they are reaching the point that they have screwed over enough people that it's now hitting them in the pocket.

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