As has been expected for some time Dixons has decided to let go of it’s loss making Pixmania venture and has managed to find a buyer for the struggling online retial operation.
Dixons Retail which is Europe’s second-biggest electrical goods retailer, has agreed to pay €69 million (£59 million) to Germany’s mutares to take the loss-making Pixmania online business off its hands.
Reuters reports that shares in the group, which have more than doubled over the past year, rose up to 10 percent on Thursday on the PIXmania deal and news of a withdrawal from Turkey – actions in line with Dixons’ plan to focus on markets where it has a leading “multi-channel” position with a combined stores and internet business.
Pixmania employs around 850 and saw underlying sales slump 28% in the first quarter and has been dragging down the performance of the wider Dixons group as it battles difficult markets across Europe.
Dixons has received an irrevocable offer from German industrial holding company mutares to buy Pixmania. The deal, which is subject to up to four months consultation with Pixmania’s French works councils, would see Dixons provide the cash to support mutares’s plan to develop the business.
“Pixmania operates in countries where we’re not market leader and operates a (single channel) model that is not ours. I don’t think we’re particularly good at running that kind of business,” Chief Executive Sebastian James told reporters.
“We do best when we stick to our knitting,” he added.
Dixons has also agreed to sell its loss-making 32-store ElectroWorld operations in Turkey to local specialist Bimeks for about 2 million pounds.
“That just leaves Italy to sort out, assuming Dixons keep Greece,” said independent retail analyst Nick Bubb, adding the amount of dowry paid for PIXmania was “very acceptable”.
News of the disposals came as Dixons posted a rise in first-quarter sales with growth in Britain and northern Europe, driven by robust demand for tablet computers, offsetting continued weakness in southern Europe.
Sales at stores open over a year rose 2% in the 12 weeks to July 31, though gross margins fell 0.4%, in line with analysts’ expectations according to reports.
Like-for-like sales were up 6% in the UK and Ireland and grew 5% in northern Europe. But they fell 12% in the southern Europe division, made up of Italy and Greece.
Across Europe many store groups are still struggling as government efforts to bring down national debts reduce consumers’ disposable incomes. Electrical retailers have been particularly exposed because they sell discretionary goods and face intense competition from supermarkets and internet giants like Amazon and eBay.
Sebastian James said that despite recent surveys and data showing improved economic conditions in Britain he remained cautious on the state of the market for the year ahead.
