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Weak consumer spending hits Dixons

Oh dear, oh my

Dixons has been hit by weaker consumer spending and warned of tough times ahead, the high street electrical retailer said today.

In the six months to the end of April like-for-like sales in the UK - with stores including Currys, Dixons, PC World and The Link - fell two per cent. Demand for gear such as flat screen TVs helped increase sales at Currys and Dixons, but this growth was undermined by a slide in sales at PC World (by eight per cent) and The Link (by nine per cent) over the same period.

PC World was hit by a fall in PC prices while The Link was hammered by lower levels of contract sales and price reductions on pre pay mobile services.

"Total UK sales were up three per cent reflecting a weaker consumer environment in the second half of the financial year," the retailer said in a statement.

Total group sales for the year to the end of August were up 8 per cent, with like-for-like sales up 2 per cent.

While the Dixons' business in the UK is struggling to cope in the tough conditions, its international operations are doing well reporting a 24 per cent spurt in growth. The bright spot highlights recent moves by Dixons to invest overseas in search of new markets.

Last month, for instance, it unveiled ambitious plans to expand its electrical retail operation on the Continent including Russia and Ukraine.

Said chief exec John Clare: "When we updated the market in November and January we cautioned that we were seeing a slowdown in consumer expenditure. Against this challenging backdrop, I am pleased that the group has been able to deliver another year of progress. We expect that our full year results will be in line with current expectations.

"We are cautious about the prospects for our markets over the next twelve months. Price deflation continues to be a factor, which, combined with cost inflation and a cautious UK consumer, means that the environment will be very challenging. Whilst we will always trade competitively in our markets our priorities remain a focus on gross margins and reducing our costs."

Industry figures published yesterday revealed that demand for digital cameras bombed during this spring with high street retailer Jessops also warning of tough times ahead. ®

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