Dixons pulls plug on its 34-store Spanish business

Embattled electronics seller Dixons Retail - which owns PC World and Currys - yesterday said it was closing its loss- making Spanish operations.

The group's 34 PC City stores, online arm and head office will shut by the summer and its 1,364 staff are likely to be made redundant, after Dixons failed to turn around the business in the face of Spain's economic difficulties.

Dixons - which has 1,200 stores in 28 countries - signalled it was mulling a move to pull out of Spain when it issued its second profits warning of the year last month.

Worsening trading conditions saw same-store sales tumble 11 per cent in the UK and Ireland in the 11 weeks to 26 March. It is expected that the closure will result in a one-off hit to Dixons of 30 million but boost trading results by about 5m a year.

The company said that its Spanish stores did not fit in with its plans to sell a combination of electrical goods and computers in all of its stores. Dixons has had a presence in the country for about ten years.

Noting the sale in his daily retail round-up note, Arden analyst Nick Bubb maintained its "neutral" recommendation on the stock, adding: "The shares are only about 12p but, with a fragile balance sheet, we rate the shares the weakest of weak 'holds'."

Bubb contrasted the fortunes of shares in Dixons and Comet-owner Kesa with those of online fashion retailer Asos, noting that Dixons' and Kesa's combined market cap is now just 1 billion, while Asos' has risen to 1.5bn.