Dixons today reported that underlying pre-tax profit rocketed to £30.2m in its first half from £14m last year. The results were met positively by the City.
“The stock, which has more than quadrupled over the last two years, has consistently outperformed the FT All Share over this time. Following the disposals of Pixmania and their Turkish and Italian subsidiaries, the company now has dominant market positions in the UK and Scandinavia. It will also benefit from a relatively strong product pipeline and from a reduction in interest costs (forecast at £40m in full year 2014) and property losses (forecast at £25m in full year 2014).” – Freddie George, Cantor Fitzgerald
“We flagged yesterday that with John Lewis finding the pace of electricals sales fading significantly since the ‘Black Friday’ spike, it would be interesting to hear any vibes from Dixons today on current UK trading, with the interim results (for the six months to end Oct). Needless to say, no such comment is forthcoming, but management are pretty pleased with the first half results and say that “despite the anniversary of sporting events the UK & Ireland delivered a very strong second quarter with like for likes up 12%”.
“With like-for-like sales growth accelerating, we can infer that UK momentum is strong, notwithstanding the tougher comps in the second half after the anniversary of the demise of Comet. A notably strong performance in the UK helped the group to top overall expectations on the first half, with underlying profit before tax over £30m, versus the adjusted £14m last year (ie after the loss elimination impact of the Pixmaniadeal), despite ”gusty headwinds” in Greece and a small setback in the Nordics.” – Nick Bubb, independent
“First half results show Dixons is delivering on its restructuring plans and has capitalised well on consolidation in its core UK and Nordic markets. It is now the last remaining specialist with clear market leadership. The first half beat drives a 3% full year upgrade. Dixons is more than a ‘tab-tastic’ Christmas play. It is capable of delivering double-digit growth helped by UK restructuring and investing efficiencies into price and service.” – Kate Calvert, Investec
“Retailer casualties in the sector have undoubtedly been a help to Dixons and the demise of Comet has presented opportunities beyond its core categories into areas such as white goods, but establishing itself as a clear market leader has not led to the retailer resting on its laurels. Indeed, it is set to look at improving efficiency in its supply chain over the next five years, following a comprehensive review, as online rivals edge up their delivery and fulfilment capabilities. Several distribution centres have already been closed, while capacity at its 1.5 million sq ft Newark facility has been increased by 44%.
“As has become customary in the post-recessionary climate, Dixons also sounded a note of caution for its second half outlook. Strong trading in its second half last year together with the fact that Comet’s exit from the market has now been annualised, mean Dixons will be facing off against some tough comparatives, but anticipating challenging times ahead should not detract from the group’s excellent progress. Indeed, the launch of several new must-have models from key industry players including Apple, Lenovo, Samsung and Microsoft just in time for Christmas, is expected to yield a bumper festive season for tablets and Dixons is ideally positioned to capitalise on the anticipated windfall.
“Investment in stores, competitive pricing and a growing reputation for excellent customer service are all helping Dixons to consolidate its position as the UK’s standout electricals retailer. With plans for the overhaul of its supply chain in the offing, there is no room for complacency at the top as far as Dixons is concerned and the signs are positive for the long-term success of the business.” – David Alexander, Conlumino