Telecoms and electronics retailer Dixons Carphone is now facing questions from the Work and Pensions select committee on its pension scheme plans, after its share price took a tumble due to falling profits.
The share price of Dixon Carphone slumped by as much as 20 per cent last week, after warnings that its 2018 profits are expected to be £82m less than last year, dropping from £382m to £300m.
The news has the committee worried, as according to its annual report, Dixons Carphone’s defined benefit pension scheme had a deficit of £598m, which has since shrunk to £492m.
The committee’s chairman Frank Field confirmed to City A.M. that the retailer would be receiving a letter from the group of MPs on Monday, as they seek to clarify what Dixons Carphone is doing to tackle the deficit.
Referring to the drop in share prices, Field said:
These things happen, but what we’re anxious about is [to make sure] that the pensions regulator can develop a plan, so that in these circumstances, [Dixons Carphone] meets with the chairman of trustees and can meet a payment schedule that the trustees and regulator are happy with.
[Dixons Carphone] is obviously going through a difficult time, and there’s no question that it’s going to be alright, but there’s no point for a regulator waiting to act.
Dixons and Carphone Warehouse joined forces in 2014, in a merger to the tune of £3.8bn. Shares in the new firm peaked at 500p in 2015, but have since depreciated by more than half of of that value.
Speaking to the Sunday Telegraph, a spokesman said: “Dixons Carphone can reassure the committee that our pension scheme is well funded with annual contributions of £46m.”