Jobs on the line at number three electricals group as Dixons' profits rise

More than 300 jobs are under threat at PowerHouse, the electricals retailer owned by New Zealand's Pacific Retail Group.

The job losses - thought to represent approximately 10 per cent of the workforce - were revealed as market leader Dixons unveiled a 23 per cent rise in interim pre-tax profit.

PowerHouse chief executive Peter Halkett said the reduction in staff numbers was part of ongoing restructuring that began when the business was bought from administration in 2003. A new senior management team has been drafted in over the past 15 months.

Following consultation, all 300 non-sales positions will be removed across the 120 stores. A third will be offered re-employment as sales staff.

Halkett, who has now returned to New Zealand for a month, said that sales staff would take up the administrative slack during quiet periods.

In addition, staff numbers at head office will fall from 100 to between 80 and 85.

'We are putting more responsibility in the hands of store managers and we are tending to pay more for the store managers,' he said.

Halkett added that the store manager focus adopted by PowerHouse has proved successful at Australian electricals retailer Harvey Norman. It had also been initiated in Pacific Retail's New Zealand retail divisions before they were sold.

Pacific's disposal of chains last year has prompted speculation that PowerHouse may be sold following restructuring. GUS, owner of Argos and Homebase, is among possible suitors.

Rival Dixons Group reported a strong Christmas at Currys and eponymous shops. Group like-for-like sales in the four weeks to January 8 climbed 3 per cent, held back by The Link and PC World.

Dixons chief executive John Clare said margins remained under pressure.

'We saw a decline in gross margins that accompanies the sales increase, and we put that down to lower credit commission,' he said.