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Chief executive John Browett admitted the group had not kept up with changing customer needs, and maintained staff increasingly unable to answer the technical questions of customers regarding new products.

As part of the restructuring plan, Browett intends to axe 77 of its 177 Currys.digital UK outlets, and dump whitegoods, such as washing machines, from the product lineup in favour of a focus on laptops and gadgets.

PC World shops will be revamped with larger floorspace and wider product lines, though the company plans to make them easier to navigate. The refit will be completed on 10% of stores by Christmas. A similar overhaul

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will be hitting Currys.

Staff that survive the cull will receive "training and incentives" with Browett promising to "transform the very DNA" of the business.

The cost of this turnaround is expected to be around £110m in capital expenditure, though the company expects to trim £50 million in expenditure through a management and supply chain shakeup, which will see 400 staff laid off.

Shareholders were also hit with DSG halving its shareholder dividend, immediately knocking over 8% off its share price. There was further grim reading with the company announcing £340m in exceptional costs, the bulk of which came from a
£240m write down of its struggling Italian business.

Unsurprisingly, Browett says the coming year will be "very challenging" with the benefits of the reorganisation expected to be felt in 2009 and 2010.

The turnaround is likely to be complicated by the ominous shadow of US retailer Best Buy, which recently wrapped up a billion dollar deal with Carphone Warehouse and is now planning an aggressive push on the European market.