Upturn in UK fortunes boosts Dixons
Southern Europe remains a pickle, but transformation plan appears to bear fruit in retail giant's homeland
Dixons Retail's full-year results reveal a promising performance in the UK, Ireland and northern Europe sullied by the turbulence being experienced in its southern European operations.
For the 52 weeks to 28 April, total group sales were flat on last year, standing at almost £8.2bn. However, underlying operating profit fell 8.3 per cent year on year to £128.7m.
Northern Europe was the star performer, with sales up 11 per cent to £2.6bn and underlying profit rising 11.6 per cent to £113.9m. The UK and Ireland also gave a solid showing, with revenue down two per cent to £3.8bn, but profit growing 14.7 per cent to £78.8m. UK and Ireland sales were up eight per cent annually in the fiscal year's closing quarter.
Dixons' FY12 sales in the volatile southern European markets took a five per cent hit last year and stood at £1.06bn, while operating losses in the region spiralled from £18.1m to £30.4m.
The Pixmania online retail brand also saw sales and profitability affected, with the division's top line falling nine per cent to £665m. Operating losses were £19.8m, compared with a profit of £3.5m in FY11.
Dixons chief executive Sebastian James explained that his firm now has three strategic priorities: driving a successful and sustainable business in a multi-channel world; being a leader in each of the markets in which it operates; and aligning the group to consistently leverage its scale and knowhow.
"I am pleased that by focusing our efforts on delighting customers, we have outperformed our competitors and ended the year with positive momentum delivering results at the top end of expectations," said James.
"Against a tough economic backdrop, we have continued to deliver on a clear plan to transform the business and today we are setting out our three strategic priorities to further improve our market position and build a business that is stronger, more profitable and sustainable."
UK lowdown
In the UK Dixons is pushing on with its so-called "renewal and transformation plan", as part of which 269 stores have already been refurbished and/or reformatted. A further 63 are due to be revamped in the coming year, but a number of closures also appear on the cards.
The retail giant currently runs 557 stores in the UK, but today outlined that it feels 400 to 420 locations would "provide the right level of service and convenience for customers". About 10 per cent of these would be high street shops, with the remainder being hefty out-of-town outlets, largely in the mixed Currys/PC World format.
Dixons claimed today that its Knowhow after-sales support offering is performing strongly, growing sales 40 per cent in its first year, having evolved from predecessor TechGuys. The performance of Dixons Travel stores was also given a thumbs-up, and the retailer's tech concession in Harrods has also reportedly had "an encouraging first three months".
Computing products – in particular the new iPad – were picked out as key to Dixons' solid close to the year in the UK. The company is also upbeat about the effect the nascent ultrabook market and the upcoming launch of Windows 8 will have on the business.
Meanwhile, "white goods showed modest growth" in FY12, while "the consumer electronics market was weak through the year".