Full-year sales flat but Dixons delivers ahead of expectations
Strong performances in UK/Ireland and Northern Europe
Dixons Retail today reported a relatively flat year for the 52 weeks ended 28 April 2012, with like-for-like Group sales down 3% after a strong boost of 5% in the final quarter and an underlying pre-tax profit of £70.8 million, against £85.3 million in 2010/11. Good progress was made in UK & Ireland and Northern Europe with profits up 15% and 12% respectively but the lift was offset by weaker performances in Southern Europe and PIXmania.
Total sales in the UK & Ireland division fell 2% to £3,833.9 million (2010/11 £3,925.3 million) and like-for-likes dropped 4%, with a flat second half showing an improving trend of +8% in the final quarter. Underlying operating profits increased to £78.8 million (2010/11 £68.7 million).
The retailer said that the UK & Ireland performed strongly against a “tough market” and the benefits of work carried out under its Renewal & Transformation plan benefitted the business throughout the year, enabling it to grow operating profits by 15% and putting it on track towards a sustainable return.
269 stores have been refurbished and continue to deliver average gross profit uplifts of over 20% in the first year, sustaining this level in the second and third years. A further 63 stores are expected to be reformatted in the year ahead, resulting in three quarters of sales going through new format stores by Christmas Peak this year.
“We have analysed the store estate as we increasingly integrate online and stores and currently believe that in the UK we need 400 to 420 stores to provide the right level of service and convenience for customers,” Dixons said in a statement. “This includes approximately 40 high street stores similar to our CurrysPCWorld Black store in the Westfield centre, Stratford with the remainder large out-of-town stores (Megastores and Superstores), predominantly in the 2-in-1 format.”
At product level, the launch of the new iPad helped grow the overall computing market, and with further new developments in the IT sector the potential for continued growth exists. White goods showed modest growth, and although predominantly driven by the housing cycle, the retailer said that technical innovation and energy efficiency is increasingly giving customers reasons to replace or upgrade.
The consumer electronics market remained weak throughout the year, but the group believes it traded ahead of the market for televisions, particularly in the fourth quarter with sales of large flat TVs up 25% in value.
Chief Executive Sebastian James commented: "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. Against a tough economic backdrop, we have continued to deliver on a clear plan to transform the business.
“Our service-led business model, now underpinned by the launch of Knowhow is increasingly valued and
trusted by our customers and our suppliers. The new financial year has got off to a good start with the trends seen in the final quarter of last year broadly continuing. However, we continue to plan cautiously and
manage costs aggressively. Our business is well-positioned for the year ahead."