Recession weighs down Dixons Retail revenues

 

SOUTHERN EUROPE’S economic woes have continued to weigh on Dixons Retail, dragging down full-year revenues and underlying pre-tax profit at the electrical goods chain.

The owner of the PC World and Currys brands, which last year issued two profits warnings and axed its lossmaking Spanish operations, yesterday said growth in Scandinavia had failed to offset shrinking sales at its troubled Greek and Italian businesses.

Although revenues for the year to April 28th fell 3 per cent to £8.3 billion, Sebastian James, who took over as Dixons chief executive in February, said there had been an uptick in recent trading.

“Against a tough economic backdrop, we have continued to deliver on a clear plan to transform the business,” said Mr James, noting that sales in the fourth quarter rose 5 per cent year on year.

Prices at electrical goods retailers have come under pressure from increased online competition and Dixons has been no exception. However, it has benefited from the withdrawal of Best Buy from the UK market, as well as rival Kesa Electrical’s sale of Comet to OpCapita.

In response, Dixons has cut its cost base by £60 million over the past year, and has set a target of an additional £90 million of cuts over the next two years.

Dixons operates more than 1,200 outlets across Europe, including in Ireland, and has 69 wholly owned and 29 franchised stores in Greece – a country whose economic troubles have been well documented of late. “The world is likely to go into one or two more heaves this year. I think it would be prudent to plan carefully,” said Mr James of Europe’s economic woes, and refused to rule out store closures in Greece.

Like-for-like sales in southern Europe fell 8 per cent to £1.06 billion, while revenues at Pixmania, Dixons’ online camera and electricals business, contracted 10 per cent to £665 million, and swung from a profit of £3.5 million a year ago to a loss of £20 million.

Like-for-like sales at Dixons’ UK and Ireland operations fell 4 per cent to £3.8 billion over the year.

For the 12 months to April 28th, revenues declined from £8.3 billion to £8.2 billion, and underlying pre-tax profit contracted 17 per cent to £70.8 million. – (Copyright The Financial Times Limited 2012)