How Dixons Carphone made over half a billion pounds in profit

Company reports that its profits before tax rose 10 per cent from £457 million the previous year
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Dixons Carphone – owner of Currys PC World and Carphone Warehouse – has seen its annual profits surpass £500 million for the first time. 

The company has referred to 'good reults', and say that its profits before tax for the 12 months to April 29th rose 10 per cent to £501 million. This compares with the 2015/16 profits of £457 million. 

While the company operates across the Nordics and southern Europe with brands such as Elkjøp in Norway and Kotsovolos in Greece, the majority of its business is done in the UK which accounts for 62 per cent of group's total revenue of £10.58 billion.

Speaking on the results, group chief executive Seb James said that the leadership has made efforts to make the company "stronger, lower risk and more resilient".

In terms of what drove profit, the company said that computers and white goods saw 'solid' demand, which helped to offset a mobile market that had been plagued by controversy surrounding the likes of Samsung's combustable Galaxy Note 7 and Apple's 'couragous' removal of the headphone jack with the iPhone 7. The company rather diplomatically commented, saying that "the mobile market was more challenging due to product safety and supply issues, limited product innovation and delays in product launches".

"In short, it has been a good year for Dixons Carphone," concluded James. " and it gives me great pleasure once again to thank my 43,000 colleagues for the work that they have done to deliver so well and so energetically for our customers.”

So what's behind this strong growth?

"A focus on providing what customers want," says Nick Lee, professor of marketing and researches retail selling at the Warwick Business School. 

While the company's positive reaction to customer demand has been effective, Lee points out that the "the demise of weaker competition" is also a large contributing factor to leaving Dixons Carphone as a "large dominant player" that is "offering a service wanted by a segment of the market".

"The rise of online shopping meant that demand for face-to-face retail in the technology sector was reduced, which had the expected effect of putting pressure on the incumbent bricks and mortar retailers. As such, we saw the weaker competitors failing, and some level of consolidation taking place – leading to efficiencies and cost-cutting."

The company will hope that it can continue to capitalise as the last big-name dedicated high street tech-focused retailer and that these profits will grow in the coming years. 

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