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Profits steady at Dixons despite restructuring

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Electricals retail group Dixons Retail has posted a slight dip in underlying profits in full-year results published today.

Amid tough comparisons, a struggling market and a restructuring of its operations, the owner of PC World and Currys saw total group sales drop just two per cent year-on-year in the 12 months to April 30th 2011.

Underlying group profit-before-tax, excluding discontinued operations and closed businesses, totalled £85.3 million (2009/10 £90.9 million) but once non-underlying items are factored back in the retailer recorded a loss-before-tax of £309.4 million compared to a profit of £112.7 million the previous year.

As part of its ‘renewal & transformation’ plan, Dixon has announced the closure of its PC City operation in Spain, costing the group £70.6 million, and stores have been renovated and exited across its international portfolio.

Whilst its UK & Ireland like-for-like (LFL) sales were down three per cent in the 52-week period, flat underlying profit for this region represents good business compared to the losses announced by both Best Buy UK and Comet recently.

John Browett, CEO, commented: “Maintaining sales, margin and profits is a good performance in such challenging conditions.

“We are consistently outperforming our markets and gaining share because our renewal & transformation plan continues to deliver a better and more compelling experience for customers.”

Group LFL sales were helped in the first half by the football World Cup but fell four per cent in the second six months of the year, and declined two per cent over the full 52-week period.

Sales in Nordic countries saw the most growth, up five per cent, whilst pure play e-tail sales disappointed falling five per cent over the 12 months.

Underlying group gross margin was flat in the second half and up 0.1 per cent over the year, whilst £50 million in savings were delivered last year and Dixons hopes to make cost savings of the same amount for each of the next three years.

Dixons reformatted 360 stores last year and now has 70 new-look megastores open with more refurbs on the way and the group also launched its new DKnowhow service which replaced its Tech Guys brand.

Browett added: “The store refit programme is progressing well and our relentless focus on customers’ needs is reinforced through our services brand Knowhow which gives us a differentiated offer.

“Self-help has put our business on firm foundations and in a strong position for when we emerge from the current weak consumer.”

Published on Thursday 23 June by Editorial Assistant

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