Dixons' sales fall 2pc as demand remains sluggish
Published 24/06/2011 | 05:00
GROUP like-for-like sales at the owner of Europe's biggest electrical retail chain, Dixons, fell 2pc to £8.15bn (€9.2bn) in its financial year to the end of April as the business continued to struggle with depressed consumer demand.
Underlying pre-tax profit at the company, which also owns the Currys and PC World brands, declined 6.2pc to £85.3m, with the performance prompting a 3.1pc slide in Dixons' shares, which have already declined by about 41pc over the past 12 months.
The total pre-tax loss, after deducting one-off costs including impairments of £309.4m, was £224.1m.
The impairments primarily relate to the closure of Dixons' operations in Spain, and the goodwill writeoff of its online Pixmania operation and its Greek business.
Dixons Retail chief executive John Browett has been beefing up stores in the UK, Ireland and Nordic regions to create megastores in an effort to attract more shoppers. In recent months, he has also announced the decision to shut the group's Spanish operation.
Dixons' sales in the UK and Ireland fell 3pc on a like-for-like basis to £3.8bn and were down 5pc on a currency-neutral basis. That appears to indicate that the Irish business, which is priced in euro, is having a particularly difficult time.
Mr Browett claimed the performance during the past financial year was good given the challenging conditions.
"We are consistently outperforming our markets and gaining share because our renewal and transformation plan continues to deliver a better and more compelling experience for customers," he claimed.
The company also announced its finance director, Nick Cadbury, is leaving to join an electronic components supplier.
While Mr Browett's efforts at cutting costs and boosting sales have been reasonably well received by investors, they're still awaiting the payback -- something that's unlikely to be significantly evident until consumers begin spending again.
"It's enough to try anyone's patience, which may be why the respected finance director Nick Cadbury has decided to leave," said analyst Nick Bubb at London-based Arden Partners.
Mr Browett also said that a bid for Dixons by US firm Best Buy is "unlikely", commenting on speculation that Dixons had become a takeover target.