Electricals retail group Dixons Retail has today dropped its full-year profit-before-tax (PBT) expectations, down around £20 million, to £85 million.
In a trading update issued in the middle of January the owner of Currys and PC World stores predicted PBT to reach between £110 million and £100 million, but continuingly poor sales has led this to be revised.
Like-for-like (LFL) sales in the year to March 26th fell two per cent year-on-year however during the last 11 weeks of the period LFL trading dropped seven per cent, demonstrating the increasingly difficult market conditions.
John Browett, Group CEO for Dixons, commented: “Consumer confidence across some of our markets is fragile and we expect it to continue to be so through much of 2011.
“As a result we are setting out the steps we are taking to secure the delivery of the Renewal & Transformation Plan.”
A four-point plan has been set out by the group to counter this decline; winning markets and formats which may include an exit from Spain, reducing capital expenditure to £160 million this year and £150 million each year thereafter, focusing on cash generation, and reducing property loss.
Trading across the group remains strongest in its Nordic operations, with LFL sales up nine per cent in the last 11 weeks, but its core domestic sales are still struggling.
LFLs fell 11 per cent in the UK & Ireland in the last 11 weeks and the group does not expect the current level of trading to improve during the year, but its new format stores are apparently outperforming the market and it expects operating profit for the region to reach £70 million during the year.
Browett continued: “Our Renewal & Transformation plan is working, customers are experiencing better store environments, improved ranges and increased levels of service.
“Notwithstanding the current tough conditions, we continue to make the business better for customers, easier for our colleagues and cheaper to operate and are confident that the group can deliver an EBIT return of three to four per cent over the medium term.”
The group has confirmed that it is in a consultation process over the future of its PC City stores in Spain and if it exited from the area it should eliminate around £5 million in group losses.