Dixons beats expectations but losses grow

Dixons Retail, the struggling electrical retailer, appears to be stemming losses as it seeks to transform itself into a service led company.

Like-for-like sales between July and October were down 3% on the same period of 2010. However, this was an improvement on the previous quarter when like-for-like sales were down 7%.

On a half yearly basis, though, the picture still looks grim. Dixons' underlying pre-tax loss for the 24 weeks to the 15th of Octover was £25.3m compared to a loss of just £6.9m in the equivalent period of 2010. This figure does include a £10.6m property loss and actually beats the expectations of both Credit Suisse (which predicted a loss of £30.8m) and Nomura, which forecast a loss of £29.7m.

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Dixons certainly had to contend with a difficult comparison year which included a World Cup and the launch of the iPad.

Stores in the UK and Ireland saw total sales down to £1,529.7m in the first half of the year, 5% less than the equivalent period of 2010. It reports that "white goods held up well" with "the iPad 2 and Android based tablets selling strongly". Television sales however "remain particularly weak".

The UK is the biggest division of Dixons but it also has significant interests elsewhere, notably in the Nordic countries which turned in like for like sales growth of 5%.

Commenting on the results, John Browett, Dixon's chief executive said: "Our focus on building a service-led business model is differentiating our offer for customers and suppliers. In what remains a challenging environment, the pace and impact of improvements in our operating model is driving outperformance versus our competitors and market share gains."

Since the beginning of the year Dixons' share price is down 59%.

BS