Results shine light on Dixons and Carphone Warehouse deal

Merger of Carphone Warehouse and Dixons Retail Group will be in the spotlight when the pair announce results covering the last year

Carphone Warehouse
Carphone Warehouse

The merger of Carphone Warehouse and Dixons Retail Group will be in the spotlight when the pair announce results covering the last year.

Annual results from merger partners Carphone Warehouse and Dixons Retail Group - owner of Currys and PC World - will provide more details on the prospects for their new and enlarged company on Thursday.

The firm will be called Dixons Carphone and aims to plug into the way technology is transforming modern households. The deal, which is worth £3.6bn, is set to be completed before the end of September. The new retail giant wants to fuse together the mobile phone and electrical goods sectors amid an increasing focus on the “Internet of Things”.

This is a new world where smartphones, tablets and rapid internet speeds will mean washing machines, fridges and boilers are controlled by the touch of a mobile device. Dixons head Sebastian James will be chief executive of the new group which will have combined sales of £12 billion and more than 43,000 staff across Europe. The firm will run almost 3,000 stores, with more than 1,300 in the UK.

Carphone Warehouse founder and chairman Sir Charles Dunstone will lead the board. The merger is expected to deliver combined yearly savings of £80m although there will be restructuring costs of £55m to £60m and extra investment of £70m to £80m. Dixons has already said in a trading statement that it expects to post underlying pre-tax profits at the top end of market expectations of £150m to £160m.

Earnings at Stagecoach are expected to gather steam when the bus and South West Trains rail operator posts its full-year results on Wednesday. Analysts at Investec expect the firm to post pre-tax profits of £180.1m, up from £171.6m a year ago. The Perth-based group, which operates 8,000 buses serving 2.5 million people a day, saw its regional bus arm’s like-for-like sales lift 4.8% in the 48 weeks to the end of March, while rail like-for-like revenue grew by 4.5%.

Stagecoach, led by chairman and founder Brian Souter, received a major boost when Virgin Trains won the right to continue running trains on the West Coast mainline until March 2017.

Stagecoach has a 49% stake in the service.

Virgin previously lost out in 2012 to FirstGroup in the battle for a new 13-year West Coast franchise, but the process was scrapped by the Department for Transport due to errors in the bidding process.

Virgin said there will be “significant improvements” for customers with the introduction of free superfast WiFi, more seats and new services. Brokers at Morgan Stanley are also upbeat about Stagecoach’s rail prospects because it is on a number of rail franchise shortlists in 2014 that present opportunities for growth. Carpetright executive chairman Lord Harris of Peckham will present his last set of annual results on Tuesday at the retailer he founded 25 years ago.

The business, which warned over profits for the third time in nine months in March after admitting it has yet to benefit from the housing market recovery, is expected to post annual profits of £4.5m, against £9.7m a year ago.

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