Dixons delights in a #190 million profit

Retail giant turns in higher than expected pre-tax profit thanks to increased sales of PC-related consumables and software

High street retailer Dixons has bucked the trend of falling profits for computer companies after posting better than expected end of year results.

For the year to 3 May, Dixons reached a pre-tax profit of #190.2 million ? an increase of 41 per cent on last year?s results. The company?s turnover rose 25 per cent to #2,373 million.

Dixons highlighted strong growth in sales of PC-related products as the driving force behind the results, with sales of software, consumables and peripherals increasing by 75 per cent. But the company admitted that although it had seen some growth in PC sales, the rate of growth slowed down in the second half of the year.

Stanley Kalms, Dixons chairman, said: ?The sales improvement was broadly spread across product categories. Gross margins have remained stable.?

Dixons? figures included a one-off exceptional item ? the #19 million raised by the sale of a 40 per cent shareholding in its telecoms store chain, The Link. The retailer has retained #9 million of the amount to solve problems arising from the year 2000 issue.

Sales of PCs and related products rose from 23 per cent to 29 per cent mainly because of the expansion of superstore chain PC World, which opened 10 additional stores during the year. Turnover for mail-order arm DN Computer Services, which Dixons acquired in November 1996, was #20.6 million. Dixons is using the mail-order operation as the vehicle for PC World?s presence in the business market to shift PCs.

Ten PC World stores were built over the year, contributing to a 77 per cent overall growth in sales, up from #262 million last year to #464 million this year.