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Dixons' reformatting plans on track but outlook remains cautious

Published: 29 November 2010
Electricals giant Dixons Retail, formerly known as DSG International, has reported flat group sales of £3.4bn for the 24 weeks to October 16, 2010.
Dixons' reformatting plans on track but outlook remains cautious
The company, which owns Dixons, Currys and PC World, says it has managed to significantly reduce its pre-tax losses to £7.9m from £17.6m last year. Group like-for-like sales rose 1%, while gross margins went up 0.3% across the half, driven by improved stock management and cost reductions.

In the UK and Ireland, total sales fell 1% to £1,616m compared with the same period last year, while like-for-like sales rose 2%. Gross margins improved in line with those of the group, said the company, and as a result operating losses were "significantly reduced" to £10.7m. Underlying EBIT increased to £5.3m.

The group's 'Renewal & Transformation' plan continues, with 250 stores now refitted, including 25 Megastores across the UK. 57 stores now trade as Currys and PC World 2-in-1 stores, and ahead of the peak trading period approximately 60% of revenues in the UK and Ireland will be transacted through new format stores.

According to the company, the transformed stores are delivering gross profit uplifts of 20% consistently throughout the first year (versus unreformatted stores), while stores trading for a second year are showing further gross profit uplifts of around 6%.

Online sales have increased by 20% in the UK and Ireland, with much of this growth being driven by Reserve & Collect, which grew by 53%.

Dixons Retail chief executive John Browett said: "We remain cautious on the economic outlook across many of our markets, as consumer confidence remains low. However, we have maintained our momentum in transforming the group and are performing ahead of the market."

Analysts from Credit Suisse have forecasted 2010/11 PBT of £140m and 2011/12 PBT of £165m for the company, and said the business is "in far better shape than it has been for some years".

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