Carphone Warehouse 2016 Annual Report Download - page 8

Dixons Carphone plc Annual Report and Accounts 2015/16
Strategic Report
Group Chief Executive’s Statement
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In addition there have been a raft of significant improvements
that we have made this year including: launching our new
e-commerce web platform for Carphone Warehouse;
dramatically extending the range of white goods that we can
ship next day; and rolling out our ‘own the kitchen’ small
domestic appliance layouts with much more life, colour and
interest into the majority of our larger stores and much more.
It is heartening to see the power of our UK business being
used by an excellent team to generate real differences for our
customers, and very heartening to see us all reap the rewards
for their clarity of thinking and energy.
We have done a great deal of work on our in-home and
consumer services business, Knowhow, and we will launch
a pilot of a new, highly digitally enabled and wide ranging
proposition in Leeds later this year with a view to having a
rebranded, nationwide launch in the New Year. We believe very
passionately that customers will increasingly want somebody
to take responsibility for keeping the dozens of devices and
appliances in their homes working, always on and upgraded
and that we are uniquely placed to do that cost-effectively
and well.
Our Nordics business had a good year with like-for-like
revenues up 4% over the year and 9% in the fourth quarter
and all-time record profitability in local currency. We have,
however, seen a further erosion in the Norwegian Krone versus
Sterling and this has meant that our Sterling-reported profits
are down somewhat with Headline pro forma EBIT reducing by
£7 million to £79 million. Over the last two years the Krone has
devalued significantly and, since virtually all of our goods are
imported, this has created some commercial challenges. We
have used this change to bring our prices in line with our pure-
play competitors, something that we have already done in the
UK & Ireland and this has, I believe, been a cause of the very
strong growth in our sales.
The Nordics have also seen some really encouraging
operational developments over the year. We acquired and
successfully integrated InfoCare, the largest repair company
in the region, which gives us a base upon which to build our
services and repair proposition. A major project to extend our
automated small box warehouse at Jönköping in Sweden
– and create the most modern automated small-box
distribution centre in Europe – is also well on track. We have
integrated the Phone House business in Sweden, merging
head offices and contact centres, closing 26 stores and
co-branding all remaining stores. In Norway we have
rebranded our Elkjøp Express stores to Elkjøp Phonehouse.
In both Sweden and Norway, these co-branded stores are
performing well.
Our Southern European business had a good year in the face
of significant political and economic turbulence – most notably,
of course, in Greece, and I am pleased that the Southern
Europe business has reported a 4% rise in like-for-like
revenues over the year with Headline pro forma EBIT growing
from £15 million to £17 million.
Our Greek business has increased profitability in 2015/16.
To have achieved this against this year’s backdrop is no mean
feat and is, of course, down to the efforts of our colleagues in
the region. In Greece, despite the mounting economic crisis,
our teams consistently demonstrated innovative thinking,
emotional resilience, strong management and an
entrepreneurial spirit. This meant that Kotsovolos was able to
gain significant market share. I said last year that the situation
in Greece may end up proving the aphorism that all crises lead
to opportunity and I am delighted that this remarkable team
has proved this to be correct so far.
In Spain, we have continued to move to a more flexible
franchise approach, and to pivot the model to offer multi-play,
sim-only and handset only, as well as a host of additional
services while successfully retaining our market share. Here,
again, the market has much change happening with M&A
activity and an evolving business model requiring us to be
nimble if we are to retain and grow our profitability. The Phone
House team have responded magnificently to these challenges
in the best traditions of entrepreneurship that is at the heart of
the team.
I am also particularly excited to be updating you on some
terrific progress from our Connected World Services and
Knowhow businesses. While still relatively new areas of the
Group and in the investment stage, I see huge potential and
a strong pipeline of activity.
The joint venture between our Connected World Services
business and Sprint continues to go very well and, following a
very successful trial, in January we signed a joint venture (‘JV’)
to open up to 500 stores with Sprint in the US. The Sprint JV
has had very encouraging results so far but, as always, there’s
no room for complacency and we are focused on developing
the opportunity further.
We have signed a new and separate software agreement with
Sprint and will now be rolling out our market-leading software
platform, honeyBee, across their entire estate. We also have a
fast-growing pipeline of promising discussions with companies
in a number of different segments and territories about how
honeyBee can help them.
Our support and services business also had a good year. The
integration of our distribution and repair centre to one site in
Newark means we are perfectly positioned to take advantage
of the opportunities in insurance support and reverse logistics
services. Our clients are increasingly asking us for help and
support throughout a product’s lifecycle, from choosing the
right product at the outset through to installation, connection,
and repair. Behind our end-to-end service operation we have
a comprehensive – and unique – infrastructure, including
technical support, delivery, installation, repair and recycling.
This was rewarded this year as we retained our contract
through the re-bid process to manage RBS’s mobile phone
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