Dixons gaining momentum

Dixons Retail, the electrical goods retailer which owns the Currys and PC World brands, saw a sharp up-tick in like-for-like (LFL) sales in the final quarter of its financial year.

Group sales in the 52 weeks to April 28th were flat on an underlying basis compared to the year before, with strong momentum in the final quarter. Stripping out closed businesses, revenue inched up to £8,187m from £8,154m the year before, ahead of expectations of £8,151m. Group LFL sales were down 3% year-on-year over the 52 week period but were up 5% in the final quarter.

The core UK and Ireland market perked up in the last three months of the fiscal year, confirming a trend seen earlier this week in the results of Argos owner Home Retail Group, with the release of the new version of Apple's iPad pepping up the computer market. LFL sales in the UK and Ireland were up 8% in the final quarter, a performance that was topped by the 10% gain in LFL sales in the Nordic countries.

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Underlying profit before tax was at the top end of the range at £70.8m, down from £85.3m the year before. The UK & Ireland operations saw profits rise 15% from the year before, while Northern Europe put in a good shift, with profits up 12%, but this was offset by weaker performances in Southern Europe and the PIXmania online business. The company made a loss of £30.4m in Southern Europe, having suffered a loss of £18.1m in this region the year before, while PIXmania fell into the red, losing £19.8m after making £3.5m profit the year before.

The underlying numbers look healthy enough, but the reported figures contain considerably more red ink, with the group reporting a pre-tax loss of £186.7m, which is at least an improvement on the previous year's reported loss of £224.1m. The underlying results exclude trading results from closed businesses and various one-off charges.

Underlying earnings before interest and tax slipped to £115.1m from £127.6m the year before, while underlying earnings per share (EPS) fell to 1.1p from 1.6p the previous year. The market had expected EPS of 1.01p.

The group's gross margins were down by 0.3 percentage points over the full year, with margins unchanged year-on-year in the UK.

Net debt reduced to £104.0 million from £206.8 million year on year.

"The new financial year has got off to a good start with the trends seen in the final quarter of last year broadly continuing. However, we continue to plan cautiously and manage costs aggressively. Our business is well-positioned for the year ahead," claimed new Chief Executive Sebastian James.

JH