Dixons has warned that it will move more than 10% of its 300 Currys stores out of fashion-led retail parks in the next three years to cut its rent bill.
It will move 30-40 Currys stores to cheaper bulky goods parks, after the group’s total rental base increased by 5-6% in the six months to 13 November, compared with the same period in 2004.
Speaking after the group announced a half-year pretax profit rise of 23% to £136.5m, Martin Meech, managing director of Dixons retail properties, said: “We are not saying this just as a threat… it’s common sense for us to find places which are cheaper.”
Meech said Currys was a “magnet” store that helped to “create a very good location. But if we have to pay more as a result we will look elsewhere.” However, he added that Currys would stay if landlords were prepared to offer fixed rental increases.
Meech said rents at retail parks were being pushed up to A1 levels by fashion stores replacing electronics and hardware retailers.
This week Tesco, which reported record sales over the Christmas and New Year period, announced plans to trial non-food stores in out-of-town retail parks within months. The move is likely to put further pressure on rivals.
Dixons’ plans could affect landlords such as Pillar Properties, which counts Currys as one of its biggest tenants.
Group chief executive John Clare also said last week that the 25,000 sq ft Dixons XL stores on trial in Birmingham and Cardiff would be replaced by 10,000 sq ft stores, as they were “too large for the Dixons proposition”.
References: EGi News 21/01/05
