Dixons adds to high street gloom after suffering 10% sales slump

There was more woe for retailer Dixons yesterday as the PC World and Currys owner posted a slump in sales in the first quarter of its financial year.

The firm – Europe’s second-biggest electricals retailer – reported a 10 per cent fall in same-store sales during the 12 weeks to 23 July in the UK and Ireland, where it has 640 stores, and a 7 per cent drop across the group.

Dixons, which saw a 6 per cent drop in profits in the year to April, said the quarter compared to particularly strong trading in the same period last year as a result of the football World Cup and the launch of Apple’s iPad. However, the figures will do little to alleviate concerns over the general state of high street trading.

Chief executive John Browett said the company emerged relatively unscathed from the violence and looting that hit several English cities in early August.

Browett said insurance and compensation would minimise the impact and hailed his staff’s efforts to clean up damaged stores in the aftermath.

Shares rose yesterday as analysts described the update as “reassuring”.

Kate Calvert at Seymour Pierce added: “The team has worked hard to rebuild Dixons’ market leadership position by focusing on improving the customer experience and efficiencies of the business.”

Dixons has been forced to reduce the size of its estate by cutting its UK portfolio to 450 stores, comprising 70 high street stores, 310 superstores and 70 megastores. It is also refitting stores, with 375 completed.

The group hopes to save £60 million this financial year through its cost-cutting programme, while it has also reduced the amount it intends to invest in the business from £160m to £100m.

Total group sales, including new stores, were down in the period. The Nordic operations were its strongest performing, with like-for-like sales growth of 4 per cent, while its other international markets, which include Italy and Greece, were down 6 per cent.

However, Browett said the company had no intention of pulling out of either country, particularly Greece, where it is market leader. He added: “This performance was in line with our expectations when compared with particularly strong trading last year as a result of the World Cup and launch of the iPad.

“While underlying market conditions have remained challenging this year, we have continued to trade ahead of our markets as customers respond to our improving customer offer.”

Browett said the group remained cautious about the economic outlook but would continue with its cost-cutting programme and was on target to meet full-year expectations.

Dixons expects to report full-year profits of between £55m and £92m, compared with £85m a year earlier.

The firm’s shares have slumped by about 40 per cent in the past three months.