One is two years into a five-year turnaround plan and the other is affected by government intervention.
Dixons Carphone (LSE:DC.) has been given the backing of retail veteran and board member Tony DeNunzio after he bought shares in the electricals chain for the first time in two years.
His near £100,000 purchase was made on Thursday at a price of about 121p, which is close to where Dixons Carphone traded prior to last month's well-received annual results.
The full-year figures, which were slightly better than expected, were accompanied by a restored dividend of 3p a share, plus an upbeat message from chief executive Alex Baldock on the company's turnaround ambitions following a mixed performance in recent years.
- ii view: investors back confident Dixons Carphone
- Richard Beddard: a high-scoring stock with a trick up its sleeve
- Take control of your retirement planning with our award-winning, low-cost Personal Pension
DeNunzio knows the FTSE 250-listed business well, having been its senior independent director since 2016 and its deputy chairman since April 2017.
His 25 years of experience in the retail industry includes a spell as chief executive of Walmart-owned Asda and six years as chairman of Pets at Home. In May 2020, he was named chairman of the British Retail Consortium as the trade association began its response to the pandemic.
DeNunzio last bought Dixons Carphone shares at 113p in 2019, shortly after they crashed by as much as 27% in the wake of results showing a big cut to the dividend, and a warning that the mobile business would make another significant loss the following year.
Baldock is now two years into his five-year turnaround plan, with last month's annual results highlighting the resilience of its market-leading electricals division, which grew earnings in the UK and Ireland by £45 million to £209 million despite enforced temporary store closures.
The chain's significant acceleration as an omnichannel retailer was shown by online sales in its home market doubling to £3.4 billion as its electricals market share grew six percentage points.
The UK mobile business, which is built on the Carphone Warehouse estate, remained in the red after a loss of £117 million, with its planned reinvention as a smaller but more profitable and cash generative business set to be complete by 2022/23.
The division recently secured new agreements with Three, and Vodafone Group (LSE:VOD) and will soon launch a new mobile offer under the newly launched Currys brand, which the plc and other UK operations including Currys PC World and Team KnowHow will adopt from October.
- Read more from Insider here
- Subscribe to the ii YouTube channel and catch all our latest interviews and video content
Liberum analyst Adam Tomlinson said the latest guidance from the company meant a six to 12-month delay in the breakeven date for UK mobile, but that this was not a major concern given progress on the wider transformation strategy.
He said after the results: “Crucially, the ambitions and medium-term targets laid out by management, which are critical to the buy case, have not changed.”
These focus on generating over £1 billion of cumulative free cash flow and achieving an earnings margin for the group of 4%.
Tomlinson, who has a price target of 175p, representing 12.6 times 2022 earnings, is also encouraged by current trading after Baldock said the company's markets were structurally larger post-pandemic and that not all last year's growth had been pulled forward.
The business, which was created out of the merger of Dixons Retail and Carphone Warehouse in August 2014, has been run by Baldock since 2018. He was previously boss of Shop Direct.
Maiden purchase at Centrica
Elsewhere in the FTSE 250 index, Centrica (LSE:CNA) non-executive director Carol Arrowsmith has bought shares in the British Gas owner for the first time since her appointment in June 2020.
Her purchase, worth almost £25,000, came at the end of another disappointing week for beleaguered investors, with no dividend alongside Thursday's interim results and the shares hit the following day by Government plans to extend the energy price cap beyond 2023.
Centrica fell more than 2.5% to 48p as business secretary Kwasi Kwarteng also announced a trial scheme where consumers on costly tariffs would be automatically switched to cheaper ones unless they opt out.
The extension to the price cap first introduced in 2019 surprised the City as Centrica shares fell to their lowest level in seven months. They had fallen to 30p at the onset of the pandemic, before recovering to 58p in May this year.
- Centrica: when you see the dividend, tell Sid
- Top 20 most-bought UK shares in Q2 2021
- Jim O’Neill: where retail investors should look next
- Six things you must do before buying any share
Arrowsmith, who leads the company's remuneration committee, bought her shares on Thursday at just above 50p.
Centrica's interim results earlier that day missed earnings forecasts by 15%, with the flat result of £262 million reflecting volatile commodity prices in energy trading, the further loss of residential energy customers and a fall in profits at British Gas services.
Chief executive Chris O'Shea's priorities for the second half of the year continue to be “fixing the basics”, as well as securing Centrica's exit from oil and gas production after plans announced in 2019 to divest of a 69% shareholding in Spirit Energy were disrupted by the pandemic.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.