Dixons pares losses after restructuring

ELECTRONICS retailer Dixons narrowed its first half-losses, it said yesterday, after closing smaller stores and replacing them with so-called “big box” units.

The company reported a £7.9m loss in the six months to 30 September, less than the £17.6m loss it made in the same period last year.

Sales growth was more muted in the second quarter, following a short-lived boost from the World Cup. Like-for-like sales rose two per cent in the UK and Ireland, compared to a six per cent hike in the previous three months.

Slower sales of flatscreen TVs – which jumped during the football tournament – were mostly responsible for the slower growth.

Dixons has restructured its business after several quarters of losses. The company has opened new superstores, and has brought the brands Currys and PC World under one management team.

Dixons said its new or refurbished stores – which boast higher profit margins – were performing more strongly than the rest of the group.

A spokesman said: “When we transform our stores, customers are loving it, and suppliers are loving it.”

But some analysts are sceptical that physical stores can compete in the electricals marketplace, as online rivals undercut them on price.

“The company remains a work in progress, although there are some encouraging signs in the midst of a major turnaround at the group,” says Richard Hunter, analyst at Hargreaves Landsdown. “There are pure out and out retailers who would give Dixons a run for their money.”

Other analysts said Dixons could beat the current market trends. Ramona Tipnis of Shore Capital says Dixons’ high gross profit margin will keep the company in a strong position. Tipnis noted that the company is cutting costs by £50m this year.

The company runs 650 stores in the UK, including 25 megastores. Dixons closed at 26.70p on the London Stock Exchange, a gain of 10p.