Electrical retailing group DSG International - the parent company of Dixons, Currys and PC World - has announced a dramatic £29.8m loss compared with £52.5m profit a year ago. But the group is confident of posting a dfull-year profit after tackling the current economic climate head on.
The group said that comparable UK sales for the 24 weeks to October 18 were down 7 percent at Currys and 11 percent at PC World.
Total sales in the UK & Ireland were down 7 percent to £1,834.1 million (2007/08: £1,963.5 million) and like for like sales were down 8 percent. The underlying operating loss was £10.6 million (2007/08: £28.9 million profit).
In its interim statement the company calls the current trading environment "tough and volatile". While the performance of its UK Computing arms were described as "resilient", UK & Ireland Electricals were "weak".
Currys and Currys.digital were impacted by lower levels of footfall as the consumer environment weakened during the period.
For UK Computing - comprising PC World, DSGi Business and The TechGuys - total sales were down 10 percent at £696.0 million (2007/08: £772.0 million) with like for like sales down 11 percent. Underlying operating profit was £11.7 million (2007/08: £14.8 million).
Although PC World's sales were down, DSG claims that "this was primarily as a result of strong sales in the comparative period as laptop overstocks were cleared".
During the period, PC World extended its range of complete connectivity solutions. Its ‘Get Connected' mobile broadband proposition offers the biggest range of subsidised or free laptops and netbooks in the UK, DSG claims in its statement.
A number of the new format store teams are trialling a dedicated zone to demonstrate connectivity solutions for the household. Netbooks have been established as an integral product range.
Currys and PC World have introduced FIVES, a service training programme to improve staff product knowledge and service in store.
DSG has slashed its capital expenditure by £30m to £160m.
DSG chief executive John Browett described trading conditions as "febrile". After a drop in sales in mid-September, there had been no sign of any consumer confidence recovery.
"We are focused first on trading through the current tough economic environment in which we are prioritising cash generation as well as tightly managing stock, money margins and costs. Second, we are making rapid progress on our Renewal and Transformation plans and although early days the performance of the new format stores and improved service model gives us confidence for the future."
Browett remains confident that DSG will return to profit for the full-year. He is "comfortable" with analyst estimates for a pre-tax profit of between £60m and £90m for the year to the end of June 2009. Last year's pre-tax profit was £105m.
DSG shares have lost 90 percent of its value since the start of 2007.