Dixons fails to surge ahead as profits take a tumble
Dixons Retail has posted a fall in profits as the PC World and Currys owner joined rival Comet in counting the cost of gruelling trading conditions.
Underlying profits fell to £85.3m from £90.9m in the year to April, although Dixons said it was encouraged by flat operating profits in the UK and Ireland, where it also gained market share from rivals.
However, the group still slumped to a heavy bottom-line loss of £224.1m after making large accounting write-offs on the value of businesses in Spain and Greece and European e-commerce venture PIXmania.
Dixons, which has 1,269 stores across Europe, said its 642 outlets in the UK and Ireland saw sales fall by 5% to £3.8bn, with demand for white goods and iPads propping up the performance.
Trading in the last quarter was much weaker and on a like-for-like basis second half sales fell by 7%, with sales of televisions particularly weak.
On Wednesday, Kesa said its Comet business made a loss of £8.9m and added that it would consider the sale of the UK business.
Dixons downgraded profit forecasts on two occasions earlier this year, while it also pulled the plug on its loss-making PC-City business in Spain.
However, it said its programme to refit stores and increase focus on customer service was helping it weather the tough market conditions.
It has concentrated on developing its 2-in-1 Currys and PC World stores and said all high street and out of town superstores will be in the format, with a small number of standalone Currys megastores in larger catchment areas.
The group said it expected to reduce its portfolio in the UK and Ireland to 450 stores, comprising 70 high street stores, 310 superstores and 70 megastores.
Underlying profits were in line with market forecasts and helped by a strong performance from the Nordic countries, where sales and profits both increased by 8%, to £2.27bn and £105.6m respectively.
Total sales fell 2% to £8.15bn, with 5% falls in the international and e-commerce operations in addition to the drop in the UK and Ireland.
Dixons, which also revealed finance director Nicholas Cadbury has left to join industrial components distributor Premier Farnell, said the outlook in the current year remained challenging.
Nick Bubb, a retail analyst at Arden Partners, said that the underlying profit total was clearly a disappointment: "With the new year off to a poor start it is hard to see any profit growth in the current year".