Electrical retail group Dixons reported flat trading figures today after being hit by a decline in the mobile phone and personal computer markets.
Like-for-like sales in the 28 weeks to 10 November were 0.8% lower, while the figure for the Christmas and New Year trading period was down 0.6%.
Stripping out the phone and PC markets, Dixons said its festive performance would have been almost 6% higher as customers snapped up new high-tech products such as wide-screen televisions, DVD players and games consoles.
The company, which said it would create 1,400 jobs through general expansion in the next six months, said Christmas trading had been in line with expectations.
Dixons chairman Sir Stanley Kalms added of the company’s interim figures: “The group produced another solid set of results despite the significant decline in both the mobile phone and PC markets.
“Whilst there remains short-term uncertainty, new technology is expected to be one of the strongest areas of consumer expenditure.”
Dixons, which owns Currys, PC World and The Link, saw underlying pretax profits for the six-month period slip to £87.4m from £90.8m a year earlier.
The decline was blamed on the company’s recent investment in new businesses in continental Europe.
But operating profits before exceptional items at the UK retail division rose 3% to £72.9m, with gross margins up by 0.4% following supply chain improvements and the introduction of new store layouts.
Dixons said the PC market had been “significantly weaker”, but finance director Ian Livingston believed there were already signs of a recovery.
He added mobile phone sales had suffered because of comparisons with strong figures achieved a year earlier.
Livingston said: “Everyone knew the mobile phone market would be tough. 2002 will be a steady year and beyond that we will see the advent of the next generation of mobile phones.
“Then we might see a bit of a pick up but we won’t see the level of sales seen in 2000.”
Sales at The Link mobile phone business were hardest hit – falling 9% to £161m following a 41% rise a year earlier.
PC World sales grew by 5% to £581m, although the figure was down 2% on a like-for-like basis.
Elsewhere, comparable figures for Currys rose by 4%, with total sales reaching £751m.
Dixons sales, at £377m, fell 1% following the temporary closure of almost 100 stores for refurbishment and the closure of some smaller stores.
Like-for-like sales were up 1% after being affected by a significant reduction in customer traffic at airport stores following the 11 September terrorist attacks.
Shares, which have enjoyed a strong run in the last three months, fell 6% following the interim results announcement.
Pretax profits increased by 68% to £87.4m after losses from Dixons’ stake in internet firm Freeserve were added to last year’s figures.
Shareholders will receive an interim dividend of 1.375p a share, a rise of 10% on last year.
EGi News 09/01/02
