Dixons braced for impact of Comet

By MARTIN FLANAGAN
Published on 25/11/2012 00:00

DIXONS Retail will unveil more losses this week as worries mount that it may suffer from a clearance sale at distressed electricals rival, Comet.

Sunita Entwisle, analyst at Nomura, said this was “not a foregone conclusion”, even though Dixons’ interim losses are expected to have widened to £26 million from £25m in the six months to October.

Dixons, which owns Currys and PC World, is expected to say that in the medium-term the failure of its rival could provide a boost to prospects, alongside possible news about a restructuring at the company.

The group is in the midst of reducing its near 560-strong store estate in the UK to between 400 and 420 outlets.

The retailer’s floorspace sales lifted 7 per cent in its first trading quarter as Comet struggled before going into administration.

Dixons is understood to have also been helped by robust demand for iPads and Kindle devices.

Shares in Dixons have jumped two-thirds this year as strong online trading has helped it outperform rivals.

However, Sebastian James, group chief executive, is also expected to be pressed on his recent warning that UK retailers could be driven out by tax avoidance from larger multinationals.

James’s comments followed a similar warning from high street bellwether, John Lewis.

Analysts at Morgan Stanley said: “Comet’s likely demise is a game-changer for Currys. Sixty per cent of its stores are within half a mile of a Currys and we expect Dixons to capture around 40 per cent of its £1.2bn annual sales.”