Associated Press reports that faltering demand for ‘big-ticket’ electrical items will be measured this week when Dixons Retail posts results.
Currys and PC World owner Dixons Retail is expected to reveal further sales declines and widening first-half losses on Thursday after a bitter price war with rivals. The group has been slugging it out with competitors in a battle for survival in a tough electronics market that has seen Best Buy throw in the towel in the UK and loss-making Comet sold for just £2.
When Dixons last updated the market, it said like-for-like sales at its 640 stores in the UK and Ireland were down 10% in the three months to July 23.
It is expected to report further declines in its second quarter, albeit at a slightly slower rate as it comes up against weaker comparatives with the previous year.
The City expects underlying first-half losses to have widened to between £29 million and £35 million, compared with £6.9 million the previous year, mainly as a result of dire trading in Italy and Greece.
Losses at the UK business are expected to be flat at around £10 million as the group offsets the sales falls by making cost savings in its supply chain. The electronics market has been among the heaviest hit by the squeeze in consumer spending, forcing store chains to put on a raft of promotions.
Dixons’ shares have lost two-thirds of their value over the past two years after it shocked markets with a series of profits warnings. The first half is normally loss-making for Dixons but analysts will be looking for any indications about current trading ahead of the key Christmas trading period.
Dixons has launched a multimillion-pound advertising campaign featuring Star Wars’ Darth Vader in a bid to steal a march on its rivals.
Assad Malic, an analyst at Credit Suisse, said Dixons is well placed to benefit from gaining market share if Comet’s new private equity owners decide to reduce store numbers or decide to close down altogether.
Which, along with other comments and rumours, makes us ask, is Dixons business now outdated and living on borrowed time?