Dixons shares plunge after profits warning

Investors pulled the plug on electricals retailer Dixons today after it stunned the City with a shock profits warning.

Shares in the group plunged 20% after it blamed weaker sales of games consoles and audio products for a poor Christmas season.

The gloom pulled down rivals Kingfisher and Argos owner GUS and did little for the mood of the wider FTSE 100 Index.

By lunchtime the Footsie was down 23.1 points at 3934.3 after falling as low as 3913 in the first two hours of trading.

Dixons topped the fallers’ board, down 29.75p at 117.25p, while Kingfisher, home to B&Q and Comet, fell 15.5p to 199p and GUS dived 31p to 545p.

Martin Dobson, head trader at NatWest Stockbrokers, said Dixons had suffered from the lack of new “must-have” electrical products over Christmas.

He added there was still a downbeat mood in the City with many ignoring George W Bush’s headline-grabbing tax break announcement in the US last night.

“People are saying the tax breaks are targeting investors rather than industry and the Footsie is still largely on a negative tack,” he said.

It was not all bad news in the retail sector after clothing chain Next posted resilient sales figures and stuck by full-year forecasts.

While like-for-like growth of 1.7% in the 23 weeks to January 4 was far from spectacular, shares lifted nearly 3%, or 19p, to 765p.

But elsewhere, insurance stocks continued to come under pressure following Monday’s damaging profits warning from FTSE 250-stock Britannic.

The shockwaves continued to affect its blue-chip rivals with Prudential down 9.75p to 421.25p and Aviva off 16.5p at 434p.

Others on the slide included Friends Provident, down 4.25p at 110.75p and Royal & Sun Alliance, off 6p at 120p.

Britannic, which slumped 50% on Monday after pulling its dividend and annual bonus for policyholders, edged up 3p at 175.5p.

But the improvement was nothing in comparison to the 32% gain posted by fellow FTSE 250 firm Waste Recycling Group after it said it was in takeover talks.

The waste disposal firm, in which water group Kelda has a minority stake, surged to the top of the FTSE 250 leaderboard, up 71p at 292p.

And the gains helped to pull up rival Shanks, which climbed almost 19% to its highest level since September – ahead 19.5p at 122.5p.

Among other stocks, budget airline easyJet failed to get a lift from figures showing a 40% rise in December passenger numbers and fell 10.5p to 274.5p.