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Dixons avoids profits warning but tough times lie ahead

The owner of Currys and PC World spared investors another profits warning yesterday but said it expected more tough times ahead.

Dixons Retail, which has 1,200 stores in around 28 countries, continues to expect profits of around £85m for the year to April 30, having issued its second profits alert in as many months at the end of March.

Total sales for the UK were down 5% in the year, including an 8% slump in the second half of the period, but Dixons said its efforts to boost customer service and restructure the business had paid off with an enhanced market share.

City analysts were relieved that Dixons had stuck by guidance but raised concerns about the company's ability to meet targets in the current year.

As well as ongoing gruelling trading conditions, Dixons is also facing tough sales comparisons with a year earlier when results were boosted by demand for televisions before the World Cup and an exclusivity deal on the iPad.

Chief executive John Browett said: "With challenging economic headwinds continuing for many of our customers, we remain cautious on the outlook for the year ahead."

Dixons has opened new format stores and ramped up its cost-cutting by another £50m for the next three years, but has said there will be no new store closures planned in the UK, where it employs around 20,000 people.

On Wednesday Kesa Electricals, which owns rival chain Comet, said it planned to close between five and 10 stores in the UK this year. The action is part of a cost-cutting drive that will also see the closure of 12 service centres.