Wednesday 13 December 2017

Dixons beats profit forecasts on back of strong UK growth

Electricals retailer, Dixons, beat forecasts as underlying first half profit more than doubled on the back of sales growth in Britain driven by robust demand for tablet computers.

Shares in Dixons have increased 81pc so far this year as it has increasingly focused on markets where it has a leading "multi-channel" position with a combined stores and internet business.

Over the last six months the firm has offloaded the loss-making e-commerce business PIXmania and operations in Turkey and partially exited Italy.

The group, home to the Currys and PC World chains in Britain, Elkjop in Nordic countries and Kotsovolos in Greece, said on Tuesday it made an underlying pretax profit of £30.2m in the six months to Oct. 31.

That compares with analyst forecasts of £20-24m and £14m in the previous year.

Total underlying group sales were £3.43bn, up 5pc on a constant currency basis, while sales at stores open over a year rose 6pc.

Like-for-like sales in the UK & Ireland increased 9pc.

Across Europe many store groups are still struggling as government efforts to bring down national debts reduce consumers' disposable incomes. Electrical retailers have been particularly exposed because they sell discretionary goods and face intense competition from supermarkets and internet giants like Amazon and eBay.

But in Britain, its biggest market, Dixons has benefited from a tablets boom, as well as the demise of rival Comet and problems at Jessops and HMV. It has also been cutting costs, revamping stores and seeking to improve products, prices and customer service.

"We remain cautious about the outlook for consumers in our markets; very strong trading this time last year, together with the fact that we have now annualised Comet's exit makes the second half more challenging," said Chief Executive Seb James.

Dixons shares closed at 51.3 pence on Monday, valuing the business at £1.9bn.

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