Just in case you missed it in the news this week it seems that both Dixons Stores Group (DSG) who own the Currys, Dixons, Pixmania and PC World stores among others have been sorely hit by a profit warning. Recently they dropped out the FTSE 100 and now have had a major blow to their share prices.
From various source it has been reported that profits may well be reduced by up to 50 million pounds, which is a big chunk in anyone’s estimation.
The electrical goods retailer saw its shares dive after warning that full-year profits would be hit following a poor Christmas, marked by very disappointing demand for laptops in the run-up to the holiday period. But we’ve also seen poor whitegoods sales and poor flat panel sales being blamed for the downturn by both Currys and Comet.
DSG International traded down 16.8%, or 18 pence, at 89.25 pence in morning trading in London.
The news hit others in the sector, sending shares of DSG’s main rival, Kesa Electrical who own Comet in the UK, down by 6.6% to 220 pence.
As it issued a trading update for the quarter ending on December 29, DSG said that year-over-year growth slowed by 1.0%, led by a 10.0% fall in sales at its British computing division and an 11.0% fall in electrical sales in Italy.
The only division which recorded any growth at all was its online retail divisions, Dixons and Fotovista, where year-over-year sales rose by 31.0%
Company Chairman Sir John Collins said he expected full year profits to be £40 million to £50 million below current guidance.
“Overall trading for this important period, in which over half our annual profits are usually generated, has been disappointing, particularly in the U.K., Italy and Spain,”
DSG shares have fallen by 54.3% since the start of 2006, losing investor confidence even before concern about the impact of the credit crunch on consumer spending told hold. Analysts have warned that retailers such as DSG International and Kesa Electricals could see their domestic profits completely wiped out by the growth of the online market for electrical goods.