Dixons has announced a 6% fall in underlying profits for the year to 30 April, and warned of a “challenging” economic backdrop.
The company announced underlying pre-tax profits of £85.3m, down from £90.9m last year. Underlying group sales were down 2% to £8.1bn, or 1% on a constant currency basis. Group like for likes were down 2% over the year but the decline accelerated to 4% in the second half.
However the company made an overall pre-tax loss of £224.1m after being hit by impairment charges totalling £309.4m related to its Spanish and Greek operations and its pure-play online business Pixmania.
Chief executive John Browett described it as “a good performance in such challenging conditions”, adding that Dixons is “consistently outperforming our markets and gaining market share.”
In the UK and Ireland, underlying profits were up fractionally at £71.3m, while sales fell 5%, or 3% on a like-for-like basis, to £3.8bn. The performance was helped by strong television sales ahead of the World Cup, but these have been “particularly weak” since January. White goods held up through the year, and the launch of the iPad2 has helped computing sales.
Gross margins in the UK rose due to better inventory management and promotion planning, and cost savings in the supply chain. 250 stores in the UK have now been refitted, with the combined Currys and PC World megastores the preferred format, but a reduction in the store base to 450 is on the cards, which the company will manage through lease expiries.
The star performer in the group once again was Nordic business Elkjop, but the company’s other international operations were affected by the economic turmoil in Greece.
The company’s pure-play e-commerce businesses Pixmania and Dixons.co.uk turned in a particularly poor performance, with sales down 5% in constant currency and underlying profits collapsing from £11.3m to £900,000.
Dixons also announced that finance director Nicholas Cadbury is leaving to take up the same role at distribution company Premier Farnell. Humphrey Singer, currently finance director of Dixons’ UK & Ireland division, will replace him.