The shares of Dixons Carphone, the UK's largest retailer of electric and cellular phones, fell by nearly 20% as the company saw a sharp decline in profits, warning of "significant" losses in the mobile business.
The group, which includes Currys, PC World and Carphone Warehouse, claims to be affected by a growing trend among consumers to delay updating their mobile phones.
Net income for the year ended April 27 decreased by one-fifth to £ 298m, compared to £ 382m a year earlier. New CEO Alex Baldock, who launched a turnaround strategy in December, warned that profits would continue to fall to around £ 210m this year. Analysts had expected a value of around £ 296m.
This is the group's second profit warning since Baldock last April. Dixon's Carphone shares fell almost 30% to 91p at the start of trading and were later traded 18% at 102p.
Baldock said the UK mobile phone market is changing rapidly and the group needs to respond faster, but that would mean "more pain next year if the mobile business suffers a significant loss."
He said, "Customers spend longer on their handsets, in some cases three to four years. Some say this will change with 5G, but we will not depend on it. "
The Group achieved a pre-tax legal loss of £ 259 million, compared to a profit of £ 289 million in the previous year, which reflected charges of £ 557 million, including a write-down of £ 383 million on Carphone Warehouse.
Carphone Warehouse, which now has 560 stores compared to 662 the previous year, posted a loss of £ 438m and the company expects to return to profit only in 2022. Baldock did not rule out shutting down more stores, although there are no plans at the moment.
Richard Hunter, Market Leader at Investment Platform Interactive Investor, said: "Overall, the ambitious Five-Year Transformation Plan has many promises and goals, but it's just too early to judge if they are achievable.
"Lately, investors have little patience with Dixons. Even before today's decline, equities fell 37% last year, compared to a decline of 8% for the broader FTSE250 index. "