Dixons' chief executive John Clare wondered "what you have to do to boost the share price" when it tumbled yesterday, despite a 53 per cent half-year profits increase at the electrical retail group. PC World and the Link communications chain were major contributors to the group's 24 per cent revenue increase.
Shares fell by five per cent, closing down 27p at 511p, partly reflecting City disappointment with Dixons' predictions for Christmas revenues, which will be part of the third quarter report, to be announced in April. Although Clare said sales in the eight weeks leading up to 4 January were up 20 per cent on last year, his statement was less spectacular than many had hoped. Clare said Christmas trading was "above our budgets and we have had a very strong start to the January sales", but it was not enough to delight investors.
Interim pre-tax profit rose by 53 per cent to #57.5 million on sales up 24 per cent to #1.06 billion (eight per cent on a like-for-like basis, since much of the growth has come from new stores set up under Dixons #100 million expansion drive). Gross margins held steady despite fierce competition. Clare said he was confident of continued growth, but warned the general election could dent consumer confidence "whoever wins".
The main factors behind the growth, Clare said, were returns on Dixons' extensive investments in expanding all its divisions, which will total #100 million by the end of this year; and strong performance from Currys and PC World superstores. The Dixons high street chain increased sales by 12 per cent to #294 million and PC World almost doubled sales to #183 million. This increase came mainly from six new superstores, but even the like-for-like growth was 21 per cent. Link, the communications retail chain, saw its sales treble to #23 million.
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