Dixons hails profits rebound

The owner of PC World and Currys offered some cheer from the embattled sector today as it posted a 15% hike in UK & Ireland profits after a rebound in sales.

Dixons hails profits rebound

The owner of PC World and Currys offered some cheer from the embattled sector today as it posted a 15% hike in UK & Ireland profits after a rebound in sales.

Dixons Retail Group, which has outperformed struggling rivals such as Comet and Argos in recent months, said underlying operating profits across UK & Ireland rose to £78.8m (€62.1m) in the year to April 28.

It confirmed that the division's sales turnaround in the final quarter - up 8% amid a full year decline of 4% - had continued into the new financial year.

The robust UK & Ireland performance helped limit the impact of the eurozone crisis on its southern European arm, with wider group underlying pre-tax profits down 17% to £70.8m (€55.8m).

But Dixons signalled more store closures that will reduce the current 557-strong estate in the UK to between 400 and 420 outlets, compared with expectations last year for 450 stores.

In a sign of further pain for Britain's high street, Dixons revealed that most of the additional store closures will go from town centre locations.

The group now plans to reduce its high street estate by a further 30 outlets to 40, focusing on a new format of "urban toyshops" that has been showcased in its CurrysPCWorld Black store in the Westfield centre, Stratford.

But Dixons said the closures would be done over a long time frame as leases expire and was not expected to lead to large staff cuts, as it hopes to relocate colleagues to nearby stores or larger superstores and megastores.

Dixons became the latest retailer to thank the launch of Apple's new iPad tablet computer for helping boost consumer electronics sales.

Earlier this week, Home Retail Group reported better-than-expected sales at its catalogue chain Argos, driven by sales of the iPad 3.

Dixons said further launches, such as Windows 8 later in the year, gave hope for further growth in computing sales.

It also saw large flat screen television sales soar 25% in the final quarter.

But Freddie George, retail analyst at Seymour Pierce, gave a cautious outlook for the group.

He said: "We believe the UK, which has benefited from the digital switchover in the south, will see like-for-like sales slow in this financial year. We have to be convinced that any improvement in trading will convert into higher profitability."

Dixons plans to slash costs further across its struggling southern Europe estate - with its Italian and Greek divisions hard hit by economic woes.

Group-wide, it has cut £285m (€224.6m) in costs over the past five years and is targeting another £90m (€70.9m) of costs to be removed over the next two financial years.

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