Bottom Line: Investors are right to cheer next stage in this retailer’s recovery

Elizabeth Fournier

DIXONS may have turned in a decent set of first quarter results yesterday, but what really had investors piling in was the long-awaited disposal of problem child Pixmania – even though it came with a £58m dent to the balance sheet.

They’re right to be breathing a sigh of relief. Though the dowry is large, it’s no worse than analysts expected – and the removal of £44m of potential losses in the firm’s revised structure (from Pixmania and the Turkish business combined) is a huge weight off the company’s back.

Since the collapse of rival Comet last year, Dixons has managed to make the most of the reduction in competition – gaining market share and seeing the benefits come through in like-for-like sales, up two per cent on last year despite the struggling southern European brands.

Though shares in Dixons are already up 135 per cent over the past year – outperforming the FTSE 250 – they’re still well below their most recent high spot of 220p, reached in September 2006.

With good news coming down the pipeline, and medium-term growth prospects looking strong, there’s no reason to believe they can’t keep climbing higher. Now is a good time to get on board.