Job cuts and store closures on cards at Phones 4u following Vodafone’s exit

Job cuts and store closures on cards at Phones 4u following Vodafone’s exit

Job cuts and store closures could be on the cards at Phones 4u after CEO David Kassler said the company is considering ‘all options’ including deep cost cuts and a merger, following news of the loss of its trading partnership with Vodafone.

Kassler revealed the company’s strategy in a conference call with lenders, according to the Sunday Times, which saw a leaked transcript of the call.

The Vodafone deal, which expires in February, accounted for a third of its new connections, a fifth of overall business and £70m of gross profit. Losing it was a “significant blow”, Kassler admitted in the conference call.
He added: ‘There is no automatic saving of the £50m in fixed costs, just because Vodafone goes away, so it’s very much an allocation of costs that we have in our business, mainly rent and staff costs in the stores. If you were not able to replace that volume, clearly there is a major management challenge on cost reduction.’ He added: “If we lost £70m, clearly we would be in breach of covenants.’

Phones 4u employs around 6,000 staff across around 700 stores. Staff at its 150 plus concessions at Dixons Currys/PC World stores are already facing uncertainty, with the closure of the concessions due next year, following the merger of Dixons Retail and Carphone Warehouse, which resulted in the termination next year of Phones 4u’s partnership with Dixons.

Vodafone cut its ties with Phones 4u after a major review of its indirect partner relationships. The review also saw it strengthen its ties with Phones 4u rival Dixons Carphone.

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