Dixons profits on target

THE consumer spending slowdown has sent sales into reverse at Dixons, Britain's biggest electrical goods retailer, and chief executive John Clare says trading conditions will remain 'very challenging' in the year ahead.

But group profits will meet market expectations for the year to 30 April 2005, he said. These are around the £345m mark, up from £332m the previous year.

Growth has been slowing at the group over the past year and underlying sales in Britain slipped into negative territory in the second half, falling 2% over the 24 weeks to 30 April.

The overall UK sales figure was also down by 2%. Overseas, like-for-like sales were up 1%, leaving the group as a whole down by 1% for the six months. Margins were also lower over the year, although there was a slight improvement in the second half.

Clare said Dixons continued to gain market share in its core domestic market but the slowdown in sales was seen across the group's chains - Currys slowed from 6% to 2% in the second half while PC World, hit by severe price deflation, saw underlying sales down by 8% in the second half.

He highlighted the group's growing overseas operations, which pushed their contribution to one-third of group sales for the first time. It now has operations in 12 countries outside the UK and saw sales growth of 24% internationally.

A growing number of High Street retailers have warned of grim trading conditions in recent weeks, including B&Q group Kingfisher, discount retailer Matalan and catalogue stores group Argos. Sales at Matalan fell by 8.8% in March and April and chief executive John King said that unless the economic environment improved, there would be no growth in profits this year.