Dixons Sales Slide But Victory Claimed

Reuters reports Dixons Retail has said it outperformed high street rivals Argos and Comet over Christmas without the need to drop its prices.

Shares in Dixons rose over 13% on Tuesday after the firm said its gross profit margins were flat year on year in the 12 weeks to January 7, though its sales fall did accelerate.

Chief Executive John Browett said that while overall demand for electrical goods across Europe was subdued, particularly in consumer electronics, Dixons benefited from better sales of higher margin items, such as iPads and other tablet computers, Kindle e-readers, headphones and small domestic appliances such as coffee machines.

That compared with analysts' forecasts of a fall of 4-6 percent and a decrease of 3 percent in the second quarter.

Less discounting meant UK gross margins were up 0.4 percentage points, and although like-for-like sales fell 7 percent, they were flat in the two weeks before Christmas.

"We were ahead (of rivals). You can see it in some of the competitors' numbers," Browett told reporters.

Dixons' performance also reflected a store revamp programme focused on more popular megastores, better customer service and a well received Christmas advertising campaign featuring Star Wars villain Darth Vader.

Dixons said it had seen a mini-boom in UK trading since the anniversary of the VAT sales tax rise on January 4, with like-for-like sales up 23 percent over the 10 days to January 14.

Despite a 10 percent fall in like-for-like sales over the 12-week period at Dixons' Southern Europe division, which includes Italy and Greece, Browett said the group had performed solidly in the peak trading period and now had cash and bank facilities to make a 150 million pounds ($230 million) bond repayment due in November.

"The most important trading period of the year is now over, and, with other retailers dropping like flies, these numbers have to be mildly encouraging, given the absence of a profit warning," said Panmure Gordon analyst Philip Dorgan.

Browett said that with consumer confidence in many of its markets fragile it would maintain a cautious approach to the outlook for the year ahead, though events such as the London Olympics, Euro 2012 soccer championships and Queen's Jubilee provide some optimism of a stimulus to television sales.