Shares fell this morning at electricals retailer Dixons Retail after it announced a decline in total sales of one per cent over the last quarter.
The retail group, which owns PC World, Currys and Dixons.co.uk, saw like-for-like (LFL) group sales reduce by two per cent in the 12 weeks to January 8th 2011 with trade declining across all but one division.
UK & Ireland total sales fell five per cent and LFLs were lower by four per cent, with trade only increasing at its Nordic country outlets (up 11 per cent) during the period.
John Browett, Group CEO for Dixons Retail, said: “Peak trading has been solid in a tough market. The adverse weather conditions reduced footfall in the run up to Christmas Day.
“We saw strong trade in the post Christmas sales as customers were keen to take advantage of our great deals on 3D TVs, Apple products, tablets and white goods ahead of the rise in VAT in the UK.”
Despite this apparent confidence from the Dixons management, it is not shared by the market and shares in the company fell eight per cent following today’s trading announcement.
In a report this morning, analysts for Investec Securities Katherine Wynne and David Jeary explained Dixons poor performance but remain cautiously optimistic over the retailer’s future.
“Dixons has guided to the lower end of consensus profit-before-tax range, namely £100 million to £110 million, despite delivering a better than feared group LFL decline,” they wrote.
“Gross group margin was down 20 base points, compared with the first half gain of 30 base points and last year’s 80 base points decline in Q3. We remain buyers however, given its long-term self-help programme and the technology cycle.”
The group is in the process of a ‘Renewal & Transformation’ plan, with its new concept store Dixons Black currently being trialled and cost saving initiatives being implemented.
New format stores for the group have continued to deliver strong gross profit uplifts, rising 20 per cent during the quarter.
Browett added: “We continue to be pleased with the performance of the reformatted stores which trade ahead of the market.
“We remain cautious about the economic outlook across our markets, but we will continue to deliver on our Renewal and Transformation plan as we make the business better, easier and cheaper to run.”