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Dixons UK & Ireland returns to profitability


Electricals retail group Dixons Retail has seen profitability return across its UK & Ireland operations over its first half for the first time it five years, results released today reveal.

In the 24 weeks to October 13th 2012, group EBIT rose by £5.1 million while total underlying group sales remained flat at £3.29 billion.

Total group sales remained flat while like-for-like sales rose three per cent while in the UK & Ireland, total sales were up two per cent over the period and LFLs jumped three per cent.

Underlying pre-tax loss saw an improvement, standing at £22.2 million compared to £25.3 million in the same period last year.

However, the group announced a total loss before tax of £79.5 million as a result of the poor performance of its subsidiary Pixmania, compared with a profit of £2.4 million in the same period of 2011, though Group CEO Sebastian James promised that the business is “taking actions to improve its poor performance.”

Commenting on the results as a whole, he added: “We have made good early progress on our three strategic priorities of driving a sustainable business in a multichannel world, building on our leading market positions and have started to make some progress in sharing best practices across the Group.

“We have significantly reduced net debt, successfully undertaken a £150 million bond issue and delivered good underlying profit growth in the UK and Northern Europe.

“We have also improved our performance in Southern Europe and have now assumed full day to day control of Pixmania.”

As the group continues to concentrate its efforts on improving its online proposition, following news last month that its website is to cease operating, group multichannel sales leapt 29 per cent while Currys & PC World saw online sales surge 38 per cent.

Commenting on the group’s strategy, Lead Consultant at analyst firm Conlumino Matt Piner said: “In the UK & Ireland Dixons has given a great example of how to get back to basics and has been left with a leaner, more competitive business as a result.

“A simplification of brands, jettisoning the and fascias and combining Currys and PC World, has created a more compelling offer for consumers.

“Moreover, improvements to service and instore experience meant Dixons was able to compete against the rise of non-specialist rivals in a way that Comet was unable to.

“Another good lesson from Dixons is that it hasn’t tried to compete with internet rivals head on, but recognised what it must do to match them and then taken steps to differentiate.

“Price and a good online offer are crucial for electricals shoppers and Dixons has built a solid foundation here, while also ensuring it goes above and beyond.

“Leveraging its size to form relationships with suppliers, improving store environments and improving the shopper experience through its Knowhow service have all helped the retailer outperform in a turbulent market.”

In recent months, the electricals sector has undoubtedly continued to struggle, with rival Comet falling into administration earlier this year and announcing yesterday that some 125 stores are set to close in the run-up to Christmas, leading to thousands of redundancies.

Dixons then, has been presented an opportunity to dominate the sector and capitalise on a market recovery, said Piner and James conceded that the outlook has improved for the group thanks to recent developments.

“I am particularly encouraged by our performance in the UK & Ireland and in Northern Europe and we were particularly busy during the sporting and cultural events during the summer,” James said.

“While August and September were, as expected, a bit quieter, we remain cautiously optimistic about the outlook.

“It is increasingly clear in each of our markets that our service-based, multi-channel business model is what customers want.

“We are outpacing our competitors, and have seen Comet enter administration in the UK and Expert exiting the market in Sweden.

“The exciting pipeline of tablets, smart TVs and other technology means customers can look forward to a fantastic shopping trip with us this Christmas.”

Published on Thursday 29 November by Editorial Assistant

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