Dixons under pressure from Eurozone crisis

DIXONS Retail, the UK’s largest high street electricals group, will come under pressure this week to finally close its troubled south European arm, which continues to hobble resilient trading.

But new chief executive Sebastian James is expected to tell the City that, although all Dixons’s operations are kept under review, he is for now keeping faith with the region in the eye of the Eurozone financial storm.

Analysts say the debate over the value of operations in Italy and Greece, where the group trades as UniEuro and Kotsovolos respectively, will continue. They cite today’s uncertain Greek elections and the threat of a decade of consumer austerity in that country.

The question is set to overshadow resilient full-year results from Dixons on Thursday as the retailer has already flagged that underlying pre-tax profits will be between £65 million and £70m, down from £85.3m in the previous 12 months. The contrast between Dixons’s solid performance in Britain and northern Europe and its struggles in southern Europe was highlighted in the company’s fourth-quarter update in May.

Like-for‑like sales in Britain and Ireland, where two-thirds of its stores have been refurbished, rose 8 per cent, helped by the struggles at rivals such as Comet and the success of Apple’s iPad.

Same-floorspace sales also lifted 10 per cent in the group’s Scandinavian operation, but revenues in southern Europe slumped 9 per cent.

One analyst said: “Dixons will undoubtedly be questioned about their commitment to Italy and Greece. I think they must have considered withdrawal.

“They are said to be having problems with credit insurance with regard to their electricals suppliers for goods in the region. Suppliers are getting twitchy about the economic situation there and supplying only when they know they will get paid.”