Electricals group Dixons Retail hopes to keep consumers spending when VAT rises next year with eye-catching prices but is unlikely to stage a full-scale VAT holiday.

Chief executive John Browett said: “We’ll be very competitive. It will be similar to last time.”

Browett was cautious about the general trading outlook after Dixons, owner of the Currys and PC World chains in the UK, experienced toughening conditions as its most recent half year progressed.

The retailer reported like-for-likes up 2% at its core UK and Ireland division in the six months to October 16. A World Cup TV sales boost and the launch of Apple’s iPad got the year off to a strong start but the second quarter was “challenging”.

But Browett was confident Dixons is well positioned following the changes he has instituted, such as the opening of megastores and stronger focus on service.

“The renewal and transformation plan is working, and not just in the UK,” said Browett. He said that transformed stores were continuing to deliver growth - those trading for a second year after being overhauled are showing gross profit uplifts of about 6%.

Dixons has 28 shops in the Republic of Ireland and Browett was relaxed about how they would fare following the country’s bailout and austerity programme. “It’s something we can manage,” he said. “We’ve got a very good operation there that dovetails into the UK.”

Dixons posted interim results in line with expectations. The retailer reported a first-half underlying pre-tax loss of £7.9m - a big improvement on the £17.6m comparable figure last year. Group sales were flat at £3.35bn and like-for-likes edged up 1%. At the UK and Ireland division turnover was down 1% to £1.62bn but losses were cut from £16m to £10.7m.

Browett said: “Our focus on our customers and on delivering value, choice and service continues. We have maintained our momentum in transforming the group and are performing ahead of the market.”

As trailed ahead of the update, Dixons is to rebrand its TechGuys service as Knowhow “to provide customers with a clearly identifiable end-to-end service proposition”.

Seymour Pierce analyst Kate Calvert said Dixons’ recovery is “on track” and its position has been “significantly strengthened”. She maintained: “While we expect the share price to tread water until consumer demand strength becomes clearer in 2011, we believe Browett’s team has the right strategy to unlock significant value for shareholders over the medium term.”