Dixons cuts costs and vows to pay £150m bond on time

DIXONS is cutting more costs and trimming investment plans to counter a drop in sales and profit margins as shoppers rein in spending.

Europe’s second-largest electricals retailer and home to the Currys and PC World chains said it would cut an extra £10m of costs and limit capital spending to £100m, down from an original plan of £110m-£160m.

John Browett, chief executive, said Dixons had “every prospect” of repaying the chain’s £150m bond due in November 2012.

Sales at Dixons stores open at least a year fell seven per cent in the 12 weeks to 23 July, its first quarter, including a 10 per cent decline in the UK.

The falls were broadly in line with expectations and the drop was exaggerated by a strong performance the same time last year, when sales of TVs surged ahead of the World Cup and Apple’s popular iPad was launched.

Gross profit margins dropped one per cent as the firm strove to gain market share abroad.

Analysts at Singer said: “A reassuring trading statement from Dixons in the context of all the negative recent press.”

Dixons shares jumped after the results but faded during the day to close up 0.4 per cent at 10.63p.