November 17, 2004 Shares in Dixons have slumped by 6 per cent after the electrical goods retailer warned of a downturn in sales, compounding fears of weak high street spending at the start of the crucial Christmas trading period.
The company, which owns PC World, The Link and Currys stores as well as the Dixons chain, said that trade had “slowed in recent weeks” after a buoyant summer.
“We are cautious about the outlook for consumer expenditure on high-ticket discretionary purchases, particularly in the UK,” said John Clare, the chief executive of the group, which also runs stores on the continent.
The comments disappointed analysts alerted yesterday to the prospects of a high street slowdown when French Connection reported an 18 per cent fall in like-for-like sales and Burberry reported “subdued” recent trading.
Also this morning, Land Securities, the owner of shopping sites including the Lakeside centre, reported a “subdued” retail market.
Panmure Gordon analysts downgraded to “sell” from “hold” their rating on Dixons stock, with Citigroup Smith Barney and Teather & Greenwood teams moving to “hold” from “buy”, and Nick Bubb, at Evolution Securities, reducing his recommendation to “add” from “buy”. Dixons shares slipped by 10.5p to 156.25p before recovering some ground to stand at 157p.
Mr Clare said, however, that Dixons was “confident” over its performance at Christmas, a crucial period for most retailers.
“We are prepared for an aggressive trading environment,” he added.
In the half year to late November, like-for-like sales grew by 5 per cent, with UK takings particularly strong. Currys achieved a 9 per cent increase in same store takings with The Link improving by 8 per cent and PC World by 3 per cent. The Dixons chain, the subject of a revival drive, also grew like-for-like sales by 3 per cent.
A margin decline of 0.7 points group-wide was blamed on a higher proportion of sales being made to businesses.
“Business performance in the year to date has been satisfactory,” Mr Clare said.