Carphone Warehouse today said it will axe 2,900 jobs under plans to close all 531 of its standalone stores.
Parent company Dixons Carphone said the radical move was caused by changes in the mobile market, rather than the coronavirus outbreak.
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The firm said 40 per cent of impacted colleagues were expected to take new roles in the business.
Dixons said the changes were an “essential next step” in the turnaround of its mobile business. In 2018 the firm outlined plans to make the division — which will make a £90m loss this year — profitable.
The retailer’s mobile products will now be sold through Carphone Warehouse concessions inside 305 large Currys PC World stores and online.
The standalone stores, which represent eight per cent of the company’s total UK retail space, will close on 3 April.
“I don’t underestimate how upsetting this news will be for our colleagues, and we’ll treat everyone with honesty, respect and care,” said chief executive Alex Baldock.
“We’re working hard to look after those colleagues we can’t find new roles for, financially and otherwise. We’ll pay enhanced redundancy, any bonuses, honour their share awards, and help them find new jobs through an outplacement programme. We recognise our responsibilities towards our colleagues and communities, and intend to fulfil them.”
Carphone Warehouse’s 70 stores in the Republic of Ireland will not be affected, nor will its operations around the world.
Dixons said the move came in response to changing consumer behaviour, as people replace their handsets less often or buy them separately as part of more flexible bundles.
The firm said it had renegotiated its legacy volume commitments to the mobile operators, meaning it no longer had to hit legacy sales volume targets.
In addition, Dixons said its customers were increasingly making use of its online offering and Carphone Warehouse concessions in larger stores.
“Moving mobile into larger stores is a shrewd move that will enable the company to focus more on trial, experience and support,” said Kester Mann, analyst at CCS Insight.
“Combining the connectivity of Carphone Warehouse with the wide range of consumer electronics from Dixons Carphone is a logical step, but the currently challenging environment for consumer electronics retailing means that the company could face further difficult decisions in future.”
In a statement issued today, the retailer said it had not yet seen a material impact from the coronavirus outbreak, but warned of future difficulties.
However, the group’s Dixons Travel outlets — located in airports — has been “severely impacted” by the fall in passenger numbers in recent weeks. Dixons said it expected a £5m hit on profit as a result.
Frank Ofonagoro, director of business advisory firm Quantuma, said it would be “remiss” not to mention the impact of coronavirus on the decision to close stores.
“The increasing likelihood that more aggressive quarantine measures will be adopted in the UK and its obvious impact on shop footfall was likely the final nail in the coffin,” he said.
Nevertheless, Dixons Carphone forecast positive cashflow of roughly £200m per year as a result of the radical restructuring.
For the full year it forecast profit before tax of roughly £210m and nebt debt lower than 2018.