Dixons £200m for investors

FOOTBALL fans have been snapping up LCD and plasma TVs in the past few months ahead of Euro 2004, with equipment flying off the shelves at electrical retailers.

Dixons said today that the football tournament had been good for business and delighted the City with an 11% rise in annual profits and plans to return £200m to investors through a share buyback programme.

The return of capital to investors follows the sale of the group's stake in Wanadoo, the French internet business formerly known as Freeserve, and the disposal of Codic, the European property development business.

Wanadoo was sold for e63.1m (£44m) and Codic went for e33m in December last year. The disposals left Dixons with net funds of £342m at the end of the year.

Chief executive John Clare said the company had considered returning money to shareholders through a special dividend but decided that a repurchase programme was more effective.

There was more good news for investors with a 10% hike in the final dividend to 5.66p, up from 5.145p a year ago, making a total for the year of 7.32p.

The group, which operates the Currys and PC World chains, said trading in the new financial year had started in line with expectations. However, it was cautious about UK prospects because of the impact of higher interest rates and a possible slowdown in house prices which could dampen consumer spending.

The strong performance at the group level disguised a disappointing showing from Dixons own branded stores, where sales dropped 6%. Currys, meanwhile, boosted sales by 4% and at PC World business was a healthy 6% ahead.

Clare said the review of the Dixons chain continued. The group has already said it will close 106 unprofitable outlets and is trialling a new larger format store, the XL. This new type of store is developing well, Clare added.

Four new XL stores opened in Birmingham, Swansea, Hull and Doncaster and a further two are due to open this year. The development of the XL branded stores will see Dixons create 1,000 jobs in the UK.

Overseas, Dixons saw losses increasing from £9.7m to £11.6m at Electro World, despite making good gains in market share in Hungary and the Czech Republic. Dixons said new contracts with suppliers would help improve margins. The company opened three new Electro World stores, one in Hungary and two in the Czech Republic, taking the group total to nine.

In Ireland, sales jumped 19% to £72m, which pushed the business back into the black with a £1.4m operating profit from last year‘s £600,000 loss.

International retail sales soared 47% to £1.76bn, reflecting new store openings. On a comparable basis, revenues were up 4% and profit was up 59% to £63.6m. The international businesses now account for 27% of group sales.