Dixons returns to health with UK profit

29 Nov 2012
PC World

High street retailer posts first UK profit in five years, but loses money overall

PC World-owner Dixons Retail has posted "healthy" results in the UK, saying it expects to benefit from Comet's demise.

The news brings light to an otherwise gloomy sector, with rival electronics firm Comet going into administration earlier this month, and online competition keeping the market challenging.

In the UK and Ireland, Dixons Retail - which runs Currys and PC World - reported that it had posted a profit in the first half of the year for the first time in five years. As such firms make the bulk of their profit in the second half - helped by Christmas sales - it makes "a nice milestone for us, as it means we're running a healthy business," spokesman Mark Webb told PC Pro.

While August and September were, as expected, a bit quieter, we remain cautiously optimistic about the outlook

However, the company as a whole still made a loss with international results factored in. While sales across the group were up 4% to £3.29 billion, Dixons posted an overall loss of £79.5 million for the first half, hit by a £45.2 million writedown of its French Pixmania website.

"I am particularly encouraged by our performance in the UK and Ireland and in Northern Europe, and we were particularly busy during the sporting and cultural events during the summer," said Group CEO Sebastian James in a statement. "While August and September were, as expected, a bit quieter, we remain cautiously optimistic about the outlook."

Multi-channel boost

The retailer said its like-for-like sales across the group were up 3% in the first half of the year, while "multichannel" sales were up 29% and 38% in Currys and PC World respectively.

By multichannel, Dixons is referring to how shoppers mix their in-store and online shopping. The company last month closed the Dixons website, instead pushing customers to the PC World site, saying it makes sense to have brands that offer both a shop and a website.

"It is increasingly clear in each of our markets that our service-based, multi-channel business model is what customers want," James added.

Comet concerns

According to The Telegraph, James said the failure of rival Comet would be "helpful from a market share perspective" for Dixons, but it was too early to see how much of a difference it would make - noting the fire-sale to clear stock is a cause for immediate concern.

"We think our offering is well suited to those customers shopping at Comet," James added, according to This is Money. "Those customers will be pleasantly surprised at how good we have become at providing good service."

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