Dixons Carphone and Connect

“The FTSE 100 slips 0.2% to 7,685 on Wednesday morning. The market has lost momentum since its stellar run between March and May, perhaps because of the sheer amount of political noise causing investors to pause for thought until they can make sense of proceedings,” says Russ Mould, investment director at AJ Bell.

Dixons Carphone

“Data breaches are a growing risk in the corporate world and the latest hacking attempt involving Dixons Carphone could be damaging to the prospects of the business.

“News that 5.9m payment cards and 1.2m personal data records were subject to unauthorised access last year may undermine consumer confidence in the retailer, which already operates in a highly competitive market.

“The fact this only came to light now thanks to a review of the company’s systems and data and actually occurred in 2017 is also cause for some concern.

“Having successfully reset expectations for the group with a profit warning in May, albeit at a cost to the share price, new chief executive Alex Baldock is under pressure to deliver.

“If this news leads to a further deterioration in the trading outlook, the market is likely to be unforgiving.”

Connect

“Shareholders in Connect are nursing a spectacular headache after the transport group issued a major profit warning which has put a huge dent in the share price and prompted the departure of the chief executive. The chief financial officer is also leaving but note that he had already resigned in May.

“The delivery industry has experienced problems for some time with a shortage of drivers amid the rise in e-commerce related orders. This shortfall has resulted in higher salaries for available drivers thus pushing up costs. However it seems that many operations are still being run inefficiently across the industry with reports of depots experiencing delays in getting orders out.

“The knock-on impact of this situation is that the best delivery companies are picking up more work and the worst are losing out if they’ve developed a bad reputation for service.

“Connect has experienced ‘a material fall’ in volumes through its Tuffnells delivery arm, yet its costs are still going up – the end result being a significant drop in profit.

“Adding to its problems has been the failure of its collection business Pass My Parcel to make any money, so it is being shut down.

“Overall the situation is embarrassing for the business previously known as Smiths News. Six years ago it was faced with a core business in steady decline (magazine and newspaper distribution). That prompted a move into new areas such as education supplies before settling on parcel freight as the future of the business alongside maintaining the media distribution interests.

“A new leadership team may need to think of other ideas in order to rejuvenate the company.”

These articles are for information purposes only and are not a personal recommendation or advice.