Dixons Carphone is to close 531 stores in the UK, with the loss of 2,900 jobs, in the latest blow to hit the struggling high street.
Britain’s biggest electrical and mobile phone retailer said it would close all standalone Carphone Warehouse stores on 3 April and that it would focus on selling mobile phones through its “shop in shops” in 305 big Currys PC World stores and online. In addition to the 2,900 employees being made redundant, a further 1,800 workers affected by the store closures are expected to switch to work in the group’s larger outlets.
The retailer said the move was designed to return the struggling mobile phone business, which will make a £90m loss this year, back to profitability. It has been hit by a growing trend among consumers to delay upgrading their mobile phones as well as increased competition from brands selling direct.
Dixons said it expected a “significant reduction” in sales in the months ahead because of the coronavirus outbreak but hoped shoppers would still spend online.
The group’s travel stores have been hit by the fall in passenger numbers, which will knock £5m off profits this year. The company is closing its 94 Greek stores for at least two weeks from 18 March and has increased capacity at its online business to cope with demand as stores elsewhere are also expected to close temporarily during the Covid-19 outbreak.
Despite the disruption, the group expects to meet profit targets for its full year, which ends in six weeks’ time, as it said that sales of fridges, freezers, small domestic appliances and laptops had increased after the outbreak, with people stocking up and staying at home to stop the virus spreading.
“Customers are changing very fast and we have to change with them,” said Alex Baldock, the chief executive of Carphone’s parent group, Dixons Carphone. He added that customer numbers at the group’s smaller mobile phone shops had dived by 16% this year. “We can’t wait, even in this very difficult environment. The turbulent times and uncertain outlook [underline] the importance of taking action now.”
He said the decision had been finalised on Monday night but had been in the planning stages for some time. “[Coronavirus] hasn’t been an immediate driver [of the decision to close stores,” Baldock said.
He said that enhanced redundancy packages were being offered to Carphone staff, with those on more than two years’ service receiving 75% more than the statutory minimum. The 1,700 staff with less than two years’ service, many of whom are part-time workers, will also receive between £500 and £750 on top of their statutory notice period.
The job losses will be a blow to thousands of staff at a difficult period for the retail industry, which had already been closing stores and shedding thousands of jobs before the disruption from the virus outbreak.
Other retailers are also feeling the impact of the pandemic. Debenhams has asked landlords for an immediate five-month rent holiday, warning that the retail industry faces “unprecedented pressures” because of the outbreak. The clothing chain Primark and the DIY retailer Kingfisher have warned of a hit to sales across Europe after government-enforced store closures in Italy, France, Spain and Austria.
Baldock said Dixons Carphone remained committed to having physical stores and had invested “tens of millions” of pounds in its 300 large outlets, which customers continued to visit just as regularly as previously because they wanted the ability to try out technology and see a big range of products.