Electricals group Dixons Retail is to say adiós to Spain and shut its loss-making business there as part of its strategy to concentrate on “winning markets and formats”.
Dixons at the same time revealed last month that it was reviewing the future of its 34-store PC City operation in Spain as tough trading conditions, particularly in the UK and Ireland where it runs the Currys and PC World chains, prompted a profits warning.
Dixons said the decision to quit Spain was made “due to continuing weak consumer environment and continuing losses of the business, together with the group’s plans to focus on combined electrical and computing stores.”
A compulsory redundancy scheme is being put together, which will then be submitted to the Spanish Labour Authority.
Arden analyst Nick Bubb noted that Dixons has not revealed what the exit costs are likely to be. He said: “The shares are only 12p, but with a fragile balance sheet we rate the shares the weakest of weak holds.”
Although Dixons is quitting Spain, international operations remain a key part of the business. While the UK has taken a hammering, Dixons’ Nordic division Elkjop has been performing well.
In the 11 weeks to March 26, Elkjop’s like-for-likes leapt 9%. Dixons said last month that Elkjop “remains well placed to continue to grow market share across the Nordic region.”
As well as the closure of Spain and focus on markets and business models that will generate the best returns, Dixons aims to ride out turbulent trading conditions by further cost cutting and concentration on cash generation.