Dixons to slash costs and change name

DIXONS is to slash costs by £30m as it prepares for what chief executive John Clare warns could be a lengthy downturn in consumer spending.

He also unveiled plans for Britain's biggest electrical goods retailer to change its name to DSG International although the High Street store fascias will be unaffected.

'We're still committed to the Dixons brand,' he said. 'The new name is a reflection of where the group is today.

'The Dixons chain is now less than 10% of sales and less than 5% of our space. With the growth of our international business the old name was no longer appropriate.' Costs of the change, which shareholders will have to approve, would be 'minimal', he said.

Dixons shares were down 1p at 154p in early trade.

As well as the Dixons chain, the group owns PC World, Currys and The Link and has a growing overseas business.

There has been no let-up in tough trading conditions in the UK, and the group aims to save £30m this year through a 'major restructuring' of its supply chain and by outsourcing IT operations.

There will be job losses as a result, but Clare said he did not expect these to be significant. 'We're still opening new stores and we will be a net employer of people this year,' he said.

Clare remains 'very cautious' on prospects for spending and said the current worries over pensions are a growing factor: 'When pensions is a hot topic, people are not so confident and don't make big-ticket purchases.'

He warned any increase in interest rates or 'consumer taxes' such as National Insurance would have a dramatic impact on spending and said the priority remains to focus on costs.

'We don't expect any help from the economy and have to manage this ourselves. But good retailers can benefit in tough times and we are up for it.'

News of the name change and cost-cutting came as the group reported a 4% increase in underlying profits to £343.1m for the year to 30 April. This is in line with analysts' expectations after last month's trading update. Sales were 8% ahead at £6.98bn. The dividend total is raised by 10% to 8.05p.

The biggest growth came overseas, where sales jumped 24% and now account for a third of group turnover. Like-for-like sales in the UK were up 2%.

SPECIALIST electrical goods retailers will have to boost their after-sales service and rebuild trust with consumers if they are to withstand the challenge of the supermarkets and internet rivals, according to retail research group Verdict.

'Too little focus on adding value has resulted in a marketplace heavily skewed towards price - playing into the hands of more price-driven retailers,' says Verdict. Specialists are missing out on as much as £1bn of entertainment-driven sales as a result, just as the market suffers its slowest growth in a decade.

But Dixons group remains market leader, accounting for more than £1 in every £5 spent on electricals in Britain.