Electrical retailer Dixons said it expected 2011/12 profit to be flat at best as benefits from revamped stores were being offset by weak consumer spending.
Dixons, home to the Currys and PC World chains in Britain, said first-quarter sales at stores open at least a year would likely fall because of strong comparatives from 2010 when it benefited from a surge in demand for televisions ahead of soccer's World Cup.
"We will be negative, but not disastrously so," chief executive John Browett said.
"Consumers are a little a bit less happy around the world than they were last year," he said, referring to pressure on household budgets from rising prices and austerity measures.
However, he said Dixons was taking market share and revamped stores, particularly its new megastores, were boosting profit.
"I would very much caution people around predicting doom and destruction because the reality is that we have got lots of things we are doing in our business which is improving (it)."
Dixons, which also runs UniEuro in Italy, Kotsovolos in Greece and Elkjop in Nordic countries, said profit before tax and one-off items for the year that ended on April 30th would be around £85 million, in line with the guidance it gave at a profit warning in March.
It also said it was comfortable with forecasts for 2011/12, which it said were mostly pitched around £70-90 million.
Singer analysts were relieved trading had not got worse since March, but remained downbeat. "The combination of relatively high exposure to the UK, high net debt, and a pension deficit, means the rating looks too high until such a time as UK trading risk subsides," they said.
Retailers across Europe, particularly those selling discretionary items like electrical goods, have been struggling as consumers grapple with rising prices, subdued wages growth and government cutbacks.
Earlier this month, German group Metro said underlying first-quarter sales fell 4 percent at its Media-Markt Saturn unit, Europe's biggest electricals business, while British company Kesa said on Wednesday trading at its domestic chain had got worse.
Dixons said like-for-like sales fell 4 per cent in the 28 weeks to April 30th, its fiscal second half, with a 7 per cent decline in Britain and Ireland only partly offset by a 9 per cent rise in Nordic countries.
Gross profit margins were flat, while net debt was about £220 million.
Mr Browett said April was a better month than some preceding ones, helped by Easter, but cautioned against reading too much into short trading periods.
While demand was subdued, individual products like Dr Dre headphones and tablet computers were selling well, he said.
He predicted Apple's iPad 2 tablet computer would be bigger than the original in terms of sales.
Dixons accounted for about 22 per cent of sales of consumer electrical goods in Britain, at the top end of its traditional range, Mr Browett said on a conference call.
Reuters
