Electricals retailer Dixons is to sell its underperforming French etail business Pixmania and its loss-making Turkish arm ElectroWorld.
Dixons chief executive Seb James said the deals represent a “further milestone in our strategic plan to focus on markets where we have leading positions”.
Dixons has received an irrevocable offer from German investment firm Mutares for Pixmania, and entered into an agreement to sell ElectroWorld to Turkish electricals retailer Bimeks. The Bimeks deal is expected to complete by the end of this calendar year and Dixons is to receive a cash consideration of approximately £2m over two years.
James said he was “very pleased” to secure the sales of the two businesses.
The deals came as Dixons revealed strong trading in its first quarter to July 31. UK and Ireland like-for-likes rose 6% despite the “unusually sunny July and last year’s summer of sport” which meant the retailer was up against tough comparables.
Like-for-likes rose 5% in northern Europe but slumped 12% in southern Europe as the retailer “continued to experience difficult market conditions as well as cooler summer weather affecting air-conditioning sales”.
Group gross margins fell 0.4% in the first quarter, “driven largely by our continued drive for even better value for customers, particularly in the Nordics”.
James said: “Against some very good comparables last year, and despite a July that was sizzling in the North and chilly in the South (affecting electronics and air conditioning sales respectively for that month) we have had an encouraging start to the year.
“Margins have held up reasonably well across the group despite some anticipated and vigorous skirmishes in the Nordics where, I am happy to say, we have continued to grow market share.
“We are continuing to improve our proposition for our customers. We are the first to offer same-day delivery across our product range to many of our customers in the UK, our multichannel proposition is getting easier to use, we have further improved our customer advocacy results, and our pricing is ever sharper.
“I am a passionate believer that Dixons succeeds where we offer our customers an integrated multichannel proposition, where we are the market leader and that we do best when we stick to our knitting. So I am very pleased to be able to announce that we have received an irrevocable offer for Pixmania. I am also pleased that we have agreed the sale of our ElectroWorld operations in Turkey to Bimeks.
“Despite some reports of improved economic conditions, we remain cautious on the state of the market for the year ahead. But with this good start, I am excited about the rest of the year and about the future for a successful and simplified group.”
Dixons has also put its advertising account up for review. It is currently handled by M&C Saatchi.