Electronics chain sees gloom to 2010
Sep 4 2008 by Iain Laing, The Journal
CONSUMER electronics group DSG International has reported a worse-than-expected fall in sales and warned there was little hope of a market recovery until 2010.
The Currys and PC World owner said it was cracking on with turnaround plans and cost savings to combat sliding sales, which were down 7% on a comparable basis in the 16 weeks to August 23.
DSG also confirmed details of its new UK larger store trial in what is seen as its fight-back to incoming competition from US firm Best Buy’s planned assault on the market. A new 50,000sq ft megastore is to open near Birmingham this autumn.
The launch precedes Best Buy’s plans to launch consumer electronic superstores across the UK and Europe after striking a £1.1bn deal with Carphone Warehouse earlier this year.
DSG’s PC World chain in particular suffered, with sales down 12% since the start of its financial year. UK and Ireland electricals were 7% lower.
Margins across the group fell 0.75% year-on-year in the period, with operations across Europe mirroring the difficult UK environment, seeing sales decline 4% in the Nordic region and 12% in southern Europe.
Its e-commerce operation – including Dixons.co.uk and pan-European e-tailer Pixmania – was the only division to see an increase in like-for-like sales, up 6%.
Chief executive John Browett said: “We have had a challenging start to the year, although we are trading against tough comparables. The economic backdrop in which the group operates remains difficult across Europe and we are managing costs and stock levels accordingly. We remain very cautious about the consumer outlook.”
He said the group was not expecting to see a recovery this year or next.
DSG is battling to combat a slowdown in consumer spending and reported a 30% slide in annual profits last June, having already warned over profits twice this year.
Yesterday it announced plans to trim a further £25m in costs on top of £50m previously achieved, while it also reported on store revamps under its three-year revival plan.
