Dixons Carphone will close its airport store business, Dixons Travel. Credit: Wichai Termwuttipreecha / Flickr.

UK-based electronics retailer Dixons Carphone has decided to permanently close its airport store business, Dixons Travel.

The decision was revealed in the retailer’s pre-close trading update. Dixons Travel had previously contributed an annual profit of more than £20m.

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Dixons Carphone said in the filing: “We do not expect passenger numbers to recover sufficiently to compensate for the removal of airside tax-free shopping by the UK Government from 1 January.”

The company currently operates 35 Dixons Travel stores across the UK, Ireland and Oslo. Most of these shops are located at Heathrow, Gatwick, Dublin and Manchester Airports.

In 1994, the company opened its first Dixons Tax Free store at Heathrow’s third terminal.

Earlier this month, Dixons Carphone closed all its Carphone Warehouse shops in Ireland, in a move expected to put 486 jobs at risk.

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Last March, all standalone Carphone Warehouse stores in the UK closed, resulting in almost 3,000 redundancies.

This week, the company said it had repaid £73m of its government support, which it had used to pay furlough workers in the UK and Ireland. It had also paid all £144m of its VAT that had been deferred by the UK Government.

Dixons Carphone said the reimbursement was possible due to strong online growth in all markets, with online sales of Group Electricals doubling to more than £4.5bn for the year.

The company expects its year-end net cash to be around £150m.

Dixons Carphone estimates its capital expenditure for this year to be around £190m, with exceptional cash costs of nearly £130m and a £30m reduction in profit from items previously capitalised.

In another development, UK-based retailer WH Smith has launched a potential offering of around £325m of guaranteed senior unsecured convertible bonds, due in 2026.

The company has earmarked £50m to open around 100 travel stores.