SHARES in Dixons and Comet, the electricals retailers, were boosted yesterday as PowerHouse, their largest competitor, fell into administrative receivership.
Nick Dargan, a partner at Deloitte & Touche and joint administrative receiver for PowerHouse Holdings, said that 93 of the group’s 223 stores would close at the end of this month with the loss of 813 jobs.
Mr Dargan said the rest of the stores and the head office, which together employ 2,200 staff, were continuing to trade and he hoped to sell them as a going concern.
Analysts think both Dixons and Comet, the UK division of Kesa, would be interested in a number of stores, but were unlikely to buy the whole group. Other retailers such as Argos and Next may also be interested in the sites.
The analysts said that Dixons and Comet would benefit more from the loss of a major competitor than from the opportunity to buy new stores. Shares in Dixons, which also owns the Currys chain, rose 11 per cent, or 1½p, to 141½p, while Kesa shares rose 1 per cent to 222p as investors bet that Dixons would benefit more because of its stronger UK presence.
Next month the Competition Commission is to recommend regulation of extended warranty sales to the Department of Trade and Industry after an investigation, launched after an Office of Fair Trading inquiry found widespread mis-selling of extended warranties by retailers.
PowerHouse, formed when the retail businesses of three regional electrical companies Midlands, Southern and Eastern were privatised, found trading tough this year, with profits down 94 per cent to £300,000 in the year to March 2003, as competition rose, and sales of extended warranties were hit by the inquiry.
>From The Times Online