Dixons chief set to report Comet boost

By KRISTY DORSEY
Published on 13/01/2013 00:00

DIXONS chief executive Sebastian James will reveal this week how much the firm has benefited from the collapse of rival Comet in the run-up to Christmas.

The owner of the Currys and PC World chains will provide a focal point for a second hectic week of retailers’ trading updates, and could gain further from the failure on Friday of photography specialist Jessops, which has shutdown all 187 of its stores.

Dixons Retail is expected to report a surge of up to 6 per cent in UK like-for-like sales during the period, which has been dubbed the Christmas of the tablet computer.

Keith Bowman, equities analyst with Hargreaves Lansdown, said the more important question was how much of that had translated into increased profitability.

“We did see from them a fair amount of promotional activity,” Bowman noted.

Interim statements such as the trading update due from Dixons on Thursday normally focus on sales figures. However, the group is expected to reveal information on gross margins, giving some indication on profits.

Kate Calvert, retail analyst with Seymour Pierce, said there was no doubt Dixons had a “stonking Christmas”, with sales of everything from trendy gizmos to traditional white goods on the up.

Even so, she believes margins may have been hit by the fact that higher-than-expected numbers of staff were needed to deal with the surge in customers.

On the other hand, Calvert said the amount of market share picked up from Comet would give analysts a guide to Dixons’ future performance.

“It will be interesting to see how it has played through Christmas,” she said.

“We don’t know how much is coming from Comet in this financial year, so we don’t know what to expect in the next financial year, and for that reason nobody has yet adjusted their 2013 forecasts.”

Looking ahead, analysts at Espirito Santo have surmised that the collapse of Jessops could give a further boost to Currys and PC World, which both stock cameras.

“Coming on the back of Comet’s administration, we would expect Dixons to benefit and take further market share, as it arguably has the most comparable service proposition to Jessops [as opposed to say, Argos], as well as a similar range,” analysts wrote in a note to investors.

Comet’s demise is also thought to have lifted festive sales at Argos, though not to the same extent as at the Dixons stable.

Argos owner Home Retail Group, which will also release a trading update on Thursday, announced in August an overhaul of its catalogue-based business, which will become more internet-oriented in a bid to reverse two years of falling sales.

The group has said it will gradually close or re-locate 75 of its stores, but is resisting pressure for widespread shop closures.

Other firms reporting this week include Burberry, whose sales figures will reflect the health of the luxury market, and Halfords, which is expected to report slower growth after a surge in demand for bicycles following the Olympics.

Clothing chain Primark is expected to confirm its place in the ranks of the rising discounters when its parent company, Associated British Foods, updates the market on Thursday.