Belt-tightening on the high street hits Dixons Retail profits

Published on Wednesday 22 June 2011 22:21

Currys and PC World owner Dixons Retail posted lower profits as consumer belt-tightening offset the impact of plans to revamp stores and slash costs.

Dixons, which issued a profit warning in March, made an underlying pre-tax profit of 85.3 million in the year to 30 April against 90.9m a year ago.

Like rival Kesa, which said on Wednesday that its UK electrical chain Comet slipped into the red, Dixons has been hit by shoppers cutting back on big-ticket items like digital televisions.

The company said the economic backdrop remained tough, particularly faced with the challenge of matching last year's first half trading, which benefited from the World Cup and the launch of Apple's iPad.

Dixons said: "However, the group is well prepared for this environment."

Revenue in 2010-11 at Dixons - which also runs UniEuro in Italy and Elkjop in Nordic countries - was 8.3 billion, down from 8.5bn. Year-end net debt was 206.8m.

The group has been the subject of speculation about a takeover bid by US peer Best Buy, while rival Kesa has said that it may sell Comet.

It had reviewed its balance sheet given the tough conditions in its markets and made impairment and other charges totalling 309.4m linked to the closure of its operations in Spain, and the impairment of goodwill at its Kotsovolos chain in Greece and PIXmania internet business.

The group said finance director Nicholas Cadbury had quit to take up a similar role at technology goods distributor Premier Farnell and would be succeeded by Humphrey Singer.

Richard Hunter, of Hargreaves Lansdown Stockbrokers, said the results met forecasts, although a profit warning in March had led to reduced expectations. He said the group was suffering from its exposure to the weak UK economy and competition, but its statement was upbeat, signalling a revamp of its stores and a close eye on margins.