Shares in Dixons dive after firm gives profits warning
SHARES in Dixons Retail, the owner of PCWorld and Currys, plunged by as much as 18pc in London yesterday, after the company warned that profits for the current year will be at the rock-bottom end of analyst expectations and that it's considering exiting its Spanish business.
The embattled retailer which, under chief executive John Browett, has been pinning hopes for a sales revival on revamped stores, also told investors that it's embarking on a four-pronged battle plan in response to the depressed consumer environment.
In a trading statement issued yesterday, the company, which is Europe's second largest electrical retailer, said that full-year profits for the financial year ending next month will be "around" £85m (€97m).
Analysts had been pencilling in profits of anywhere between £85m and £109m (€124m), with an analyst consensus of around £106m (€120m).
Like-for-like sales in the year to March 26 were 2pc lower, with like-for-like sales in the past 11 weeks down 7pc. Dixons operates almost 30 outlets in Ireland.
The four-step action plan will include a focus on cash generation, a review of Spanish operations, diverting capital expenditure only to the "highest return projects" and reducing that spend to no more than £160m this year, and further cost reduction initiatives.
"Consumer confidence across some of our markets is fragile, and we expect it to continue to be so through much of 2011," said Mr Browett.
The company statement added: "With continuing pressure on household budgets it is difficult to see a significant improvement in this pattern of trading in the short-term".
The Confederation of British Industry said yesterday that retail sales in the UK rose unexpectedly in March, but figures on Tuesday showed that British consumers suffered the severest fall in their disposable income in 30 years during 2010.