Tuesday 24 April 2018

Dixons cuts losses but sales slow

Currys and PC World parent Dixons Retail today predicted Christmas trading would be competitive and tough as it reported slowing UK sales growth.

Dixons said like-for-like sales in the UK and Ireland rose by 2pc in the first half of its financial year, down from the 6pc improvement reported in the first quarter following a World Cup-related boost to television sales.

But the group said it outperformed a tough market and slashed underlying losses in the half year, down from £16m to £10.7m in the UK and Ireland.

Dixons chief executive John Browett put faith in the group's store overhaul project to help it through "an extremely competitive" festive season.

It has now refitted 250 stores, with 25 launched under the megastore format across the UK.

Dixons said 60pc of revenues in its core UK and Ireland division would be made in revamped stores by the time of the Christmas trading period.

These new format stores - which include 57 combined PC World and Currys outlets - are adding around four percentage points to like-for-like performance, according to the group.

Mr Browett said: "We're not expecting an easy Christmas and it will be extremely competitive as well."

However, he said the group had "managed it all before" and that the improved store format was helping it grow sales.

Dixons is hoping to see strong demand for iPads and other tablet computers in the run up to Christmas, while 3D televisions are also expected to feature strongly.

The group added its recently launched Star Wars-themed advertising campaign for the new megastores had "caught the imagination of our customers" and would help give it a head start in the battle for Christmas trade.

Dixons is fighting an increasingly competitive consumer electronics market, with pressure from new entrant Best Buy - the US consumer electronics giant that teamed up with Carphone Warehouse to launch in the UK.

It is fighting back by rolling out its own out-of-town megastores, combining Currys and PC World outlets, and refurbishing other stores.

As well as the difficult UK environment, the group's 28 stores in Ireland are also seeing dampened consumer demand amid the country's economic woes.

Irish stores returned to positive like-for-like sales growth in the first half, but customer confidence has been hit in recent days, said Dixons.

Aside from the UK & Ireland, the group's Nordic stores also saw a strong first half, but trading was more difficult across troubled European markets.

Operating losses in the international division - which includes embattled Greece - widened to £12.2m from £7.7m in the six months to October 16.

Overall group pre-tax losses more than halved to £7.9m from £17.6m a year earlier.

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