Dixons Carphone is to close its airport store business, affecting 400 staff, after the government stopped tax-free airside shopping at the start of January.

The electricals to mobile retailer said employees would all be offered alternative roles within the group, which owns the Currys PC World and Carphone Warehouse brands.

Dixons Travel has 35 stores and has typically contributed more than £20m to annual profits.

The group said: “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.

“This has led to the difficult decision to close this business.”

The announcement came as Dixons Carphone also said that – thanks to strong recent sales – it was paying back £73m in furlough support from the government.

In December, the group’s chief executive Alex Baldock had faced questions over why the money was not being repaid as it swung to a half-year profit.

It has also now repaid all of the £144m in VAT that had been deferred by the government.

In a trading update, the company said like-for-like sales in its UK and Ireland electricals division were up by 11% in the 25 weeks to 24 April despite the continued closure of stores, thanks to “very strong online growth”.

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That was an acceleration on the 8% pace of growth seen over the peak Christmas trading period.

Dixons Carphone also said that group electricals online sales were expected to more than double to £4.5bn for the full year.

But there was no mention of the company’s mobile phone division, where sales have been struggling and the group decided last year to close all standalone Carphone Warehouse UK stores.

Earlier this month, it also said it would shut the brand’s stores in Ireland.

Investors were unimpressed by the update – which comes ahead of the group’s full year results statement in June -sending shares 5% lower.

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