Business Weekly - Cambridge, UK

Providing an update on trading in the all-important 11 week period to December 29, DSG reported a 5 per cent increase in group sales, but a one per cent fall in like-for-like sales. The up-shot of the disappointing performance is that the company's full-year pre-tax profits for the year ended April 2008 will be significantly below the consensus estimates of between £290m and £300m, DSG said, with the underwhelming festive period impacting full-year figures to the tune of around £30m. The news shaved 17 per cent off DSG's share price to 89p.

Sir John Collins, group chairman said: "Overall trading for this important period, in which over half our annual profits are usually generated, has been disappointing, particularly in the UK, Italy and Spain.

"This weaker trading, together with a more cautious outlook for the balance of the year, means that we now expect full year profits before tax to be some £40m - £50m lower than current expectations."

DSG's electricals business in the UK and Ireland saw stronger demand in the post Christmas sale period - driven by promotions on flat panel TVs, laptops and digital imaging - but this had the knock-on effect of negatively impacting gross margin for the period.

Sales in UK Computing were "very disappointing" with lower demand for laptops in the pre Christmas gifting period, but good demand for games consoles and digital photo frames.

The Nordics, Greece and Central European electricals businesses all delivered a "satisfactory performance" over the period, while trading in Italy and Spain was below par.

The gloomy overall picture was brightened very slightly by news that DSG's e-commerce businesses of Dixons.co.uk and FotoVista delivered total sales up 31 per cent year on year from a "strong base."

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