Electricals retailer to reinvest £110m in share buy-back
Electricals giant DSGi has pulled out of plans to buy Russian retailer Eldorado and will reinvest£100 million in a share buy-back.

Pali International analyst Nick Bubb said: 'The expectation had been that that decision would be left to the new chief executive at the year-end, but clearly the due diligence process has uncovered something in the books or in the way the Russian electricals market operates that DSGi doesn't like.'

The retailer, which owns electrical retail chains Currys and PC World, as well as the pure-play internet retailer Dixons.co.uk, also posted what it called disappointing full-year results, following a weak performance in Italy.

In the 52 weeks to April 28, underlying pre-tax profit, before restructuring costs, dropped to£295.1 million, compared with£311 million the previous year. However, sales rose 14 per cent to£7.93 billion, with like-for-likes up 4 per cent for the year.

International sales represent 41 per cent of group sales and the retailer said its major restructuring programme in Italy has been completed. For the first time, its Czech and Spanish markets have been profitable for the full year.

Internet sales account for 10 per cent of group sales, up from 3 per cent the previous year. The group said it intends to create a business base to drive its growth into the European e-tailing market and has acquired a majority interest in Pixamania, a leading electricals e-tailer.

DSGi chief executive John Clare, who steps down in September, said: 'The year was overall one of significant change for the group, in which many of the foundations for future growth were laid. In that context, I'm pleased with the performance we have delivered in most of our core businesses, including the UK, Nordics, Greece, Ireland and also in our start-up businesses in Central Europe and Spain. Our new e-commerce division has also delivered strong growth. However, our overall group result was disappointing, largely because of a weak performance in Italy.'

Commenting on dropping his plans for Eldorado, Claire said: 'Russia remains an interesting and exciting market and we will continue to watch the developments there, both commercially and politically. I expect the group to re-examine opportunities for entering this market in the future.'

The retailer said the new year has started well, despite strong comparatives because of last year's World Cup and strong TV sales. Claire added: 'While we remain cautious about the prospects for consumer expenditure in many of our markets, including the UK, I am confident that we will continue to offer an exciting range of new technology products that our customers will find appealing.'