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The company now expects its full-year profits to be £40-50 million lower than current estimates, following the seasonal slowdown. The gloomy forecast sent the company's share price plummeting by around 20%.

The Dixons Stores Group claims sales of laptops were particularly disappointing over Christmas, helping to drag sales of computer products down by 11% compared to last year. Demand was high, however, for digital photo frames and games consoles.

"Overall trading for this important period, in which over half our annual profits are usually generated, has been disappointing, particularly in the UK, Italy and Spain," says group chairman, Sir John Collins.

"This weaker trading, together with a more cautious outlook for the balance of the year, means that we now expect full year profits before tax to be some £40-£50 million lower than current expectations."

DSGI recently signed a deal with Dell to sell its PCs in its stores and websites.