Dixons Carphone's first trading update since merger: What the analysts say

This represents a mixed first update for the newly merged Dixons Carphone. Split out separately, the Dixons part of the business continues to perform strongly in the UK off the back of improving consumer sentiment and its pro-activity around pricing, stores and customer service. Moreover, this quarter saw Dixons receive a boost from the World Cup. However, the Carphone segment of the business suffered against tough 2013 comparatives and continued difficult market conditions in Spain.

Improving consumer sentiment, rising demand for white goods off the back of a healthier looking UK housing market, high demand in categories such as games consoles and tablets, and a strong pipeline of new technology – most notably the imminent arrival of the iPhone 6 – mean that the outlook for the electricals market is more positive than it has been for several years. Dixons Carphone is well placed to capitalise, though challenges undoubtedly remain and the retailer must avoid complacency if it is to continue sure-footed on its upward trajectory – Joseph Robinson, Conlumino

Dixons Carphone’s first trading update as a combined company highlights the relative strength and weaknesses in the new operation. The Dixons side of the business has continued to grow steadily, if unspectacularly, in light of opportunities presented by the Brazilian football World Cup. However, Carphone Warehouse has reported poor like-for-like sales and even worse sales decline. While a strong comparative provides some background to this, the retailer’s inability to show stable and predictable growth gives an indication to the volatility of the mobile phone industry – Matt Rubin, Verdict

Dixons Carphone first quarter sales were in line with expectations, and our forecasts are unchanged. At Dixons, trading has been solid across all product categories. At Carphone, the quarter was soft as expected, but the outlook is positive with key upcoming product launches and strong network relationships. Half of the profit growth we forecast over the next four years comes from synergies and interest payments, so it is encouraging that the early stages of a key element of the synergies – Warwick Okines, Deutsche Bank

Within the UK, Dixons’ performance has been aided by the World Cup but longer-term trends are encouraging in terms of consumer recovery and easing margin pressure. We understand this latter point is also prevalent in the Nordics and Greece, where Greece could see an improvement in loss reduction in full-year 2015. Although early days, encouraging comments are being made on the store-in-store roll-out, which is “performing ahead of the business case that we set out” (worth c. £30m of £80m outlined synergies) – Alistair Davies, Investec