Dixons and Next fight sales gloom

TOM STEVENSON

and NIGEL COPE

The increasing polarisation of the high street was confirmed yesterday with bullish trading statements from Dixons and Next contradicting the gloomy picture painted earlier in the week by House of Fraser.

Despite good rises in sales at Dixons and Next in the lead-up to Christmas, the share prices of both companies were hit yesterday as profit-takers cashed in on their dramatic rises last year. Dixons fell 14.5p at 409.5p while Next slipped 16p to 437p. Dixons accompanied news of a 41 per cent increase in profits for the six months to October with news that sales in the eight weeks since the end of the first half in October were up 23 per cent overall and 10 per cent on a like-for-like basis.

The figures were driven by the strength of the personal computer market, which Dixons entered three years ago with the launch of PCWorld, which the company believes has a 40 per cent share of the fast-growing domestic PC market. The Link, a new chain focusing on mobile phones and other communications equipment, also grew fast.

Next confirmed that sales in its high street stores between July and the end of December were 13 per cent higher than the same period last year. This was achieved with only a 4.5 per cent increase in selling space.

Next Directory performed even better, with sales up 17 per cent up on last year.

John Richards, retail analyst at NatWest Securities, said: "What we are seeing is the polarisation of the high street as it divides between the haves and the have-nots." The pattern is expected to continue today when Boots and Sears deliver trading updates. Boots is expected to report healthy sales gains while the performance at Sears has been more patchy.

Investment Column, page 18