Dixons Carphone keeps Covid rates relief despite rise in profits

Online sales more than double in half year as firm indicates it has no plans to pay back £34m in relief

Dixons Carphone has indicated it has no plan to pay back business rates relief despite reporting a rise in profits after online sales made up for closures enforced during the coronavirus pandemic.

Online sales more than doubled to £1.8bn in the half year to 31 October, and overall sales in the UK and Ireland electricals business rose by 15%. The group made a profit before interest and tax of £100m in the six-month period.

The company said “the impact of temporary store closures was more than offset by strong online sales growth” as consumers and workers confined to their homes bought laptops and computer games to get them through lockdowns.

Dixons Carphone, which also runs the Currys and PC World brands, said it received business rates tax relief worth £34m in the UK from the start of the pandemic up to 31 October.

The business rates relief was introduced by the government to help retailers through what was feared to be a difficult period. However, many retailers have now repaid the relief after sales performed better than expected.

These include most of the UK’s large supermarket chains and other essential retailers who remained open through the lockdowns, who collectively repaid more than £1.8bn after criticism of their retention of the money.

Alex Baldock, Dixons Carphone’s chief executive, repeatedly stressed that the company was “winning” in spite of “fighting with one hand tied behind our back” during the pandemic with store closures.

He said the company had been “responsible”. “We can look at ourselves in the mirror,” he said.

Dixons Carphone was not classed as an essential retailer, meaning its stores were closed through each lockdown. Overall, the company said the cost of the disruption, including the store closures and extra spending on safety measures, was £155m. After government support the negative impact was £10m.

That support also included £54m under the government’s coronavirus job retention scheme, which paid 80% of furloughed workers’ wages up to £2,500 per month.

Adjusted earnings before interest and tax, a measure of profitability, in the main UK operation nearly tripled to £95m in the half year.

Shares in the company jumped by 13% on Wednesday morning, hitting their highest level since early February when the pandemic’s effects on Europe were starting to become clear. However, the company is still in the middle of a turnaround effort that has included 2,900 redundancies and 531 store closures announced in March.

Baldock said Dixons had been affected by disruption at ports in recent weeks, although he did not expect major problems in the event of no EU trade deal being struck before the end of the Brexit transition period on 1 January. Dixons Carphone has stockpiles of two days’ worth of goods, which Baldock said was enough to see it through any disruption.

He renewed calls for reform of the business rates system to reflect more recent rental values, a move that would result in online retailers paying more. “It would get people like Amazon to pay some more tax,” Baldock said.


Jasper Jolly

The GuardianTramp

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