Dixons goes international, cuts cost by £30M |
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Wed, 22 Jun 2005 22:05
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LONDON: Britain’s biggest electrical goods retailer Dixons Group Plc is expected see major restructuring including a name change. While reporting full year profits that were in line with expectations of analysts, the company also announced that it was being forced to cut costs up to £30 million.
UK consumers know the group also as Curry’s, The Link and PC World. In continental Europe, the company trades as UniEurope, Elkjop and PC City. The group is finding its UK operations getting increasingly tough what with the current slowdown in consumer spending.
Fortunately for the group however, its non-UK operations were contributing consistently growing proportion of sales and profits. Its chain of Dixon stores contributes barely 10 percent to the group’s overall sales. Group sales at £6.98 billion were 8 percent higher than previous year. Same-store sales rose 2 percent. (Overall same-store sales had actually declined 1 percent in the second half.) Turnover from its UK businesses showed a 3 percent growth at £4.82 billion. Pretax profit declined 8 percent to 336.8 million pounds, almost matching analysts' forecast.
Chief executive John Clare said the group took the decision to cut costs because they feared a prolonged slowdown in consumer spending in the UK. Additionally, they were facing an increasingly challenging environment in their main markets which included Italy, because of which “the outlook for the year ahead is uncertain.” he said. Overall growth rate too is certainly slowing down for the group.
Clare also said the group would assume the name DSG International Plc in order to reflect its increasing international presence. Cost cutting would involve overhauling distribution network and outsourcing IT operations.
The Dixons chief admitted that there would be job losses as a result of the restructuring and cost cutting, but these, he said, would not be significant as “We’re still opening new stores and will be a net employer of people this year.”
The group is currently market leader in the UK, accounting for over £1 in every £5 being spent on purchase of electrical goods in Britain.
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