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HOME arrow Registration
DSG unleashes second profits warning in a year
Written by Lautaro Vargas   
Thursday, 10 April 2008
dsg-pcworld.jpgEurope’s largest electrical retailer, Herts-based DSG International, has announced pre-tax profits could be down a further £40m-£50m in its second profit warning of the year.

The company, which owns UK chains Currys and PC World as well as a number of European stores, saw its share price fall hard over the morning, down 9.6 per cent by lunch to 58.75p a share from a start of 65p.

DSGi said underlying profit before tax was expected to be in the range of £200m-£210m. In January it had warned that a flat Christmas meant that expected pre-tax figures of £290m-£300m would only reach £250m.

However, conditions on the high street remain tough as consumers consistently demand discounts and look increasingly on line for deals.
DSGi has addressed this to a point and its FotoVista and Dixons.co.uk e-commerce brands have shown double digit growth, compensating for falls in its main European markets.

John Browett, DSGi chief executive, said: “The trading environment since we last reported has remained challenging across our markets, particularly in the UK, Italy and Spain. Whilst like for like sales patterns are broadly in line with those we reported over the Christmas period, it is clear that customers have become increasingly promotion and deal driven, impacting gross margins.

“Going forward it is important that we increase our focus on delivering the value, choice and service that our customers demand, particularly in the prevailing difficult economic environment. I will present the first phase of the business review I have carried out since joining DSGi on 15 May 2008.”

DSGi’s business update said the UK & Ireland Electricals business had seen good demand in response to promotions on flat panel televisions, laptops and large white goods, particularly over the Easter period. However demand outside of these promotions had been lower than expected, with a negative impact on margins.

The company statement said: “Overall sales in UK Computing remain disappointing, despite reasonable demand for laptops and games consoles. Sales of stand alone non-hardware products were lower year on year, in line with the trends previously reported.

“The Nordics, Greece and Central European businesses all delivered satisfactory performances over the second half of our financial year. Trading in Spain remains difficult. The performance in Italy remains disappointing, not helped by the difficult economic environment. Our e-commerce businesses continue to grow strongly.”
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