Dixons scouts for new ventures

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The Independent Online
JOHN CLARE, chief executive of Dixons, the electrical retailing group, has set up a team to examine how the company might grow through acquisitions and greenfield start-ups.

Led by Sarah Carpenter, who previously set up the group's The Link mobile- phone shop chain, the unit is considering more than 10 medium-term options.

It is assessing opportunities both at home and in continental Europe. But the US has been ruled out, after the company's disastrous experience there with the Silo electricals chain.

Dixons is in no hurry to expand into new pastures. It sees plenty of scope for growth in its core businesses and is anxious to continue exploiting the disarray of its closest rivals.

Kingfisher-owned Comet continues to struggle because of underinvestment and poorly sited stores. The electricity utilities are pulling in their horns after largely unsuccessful forays into retailing. And last week Escom, the computer chain, appeared to be in serious trouble after its German parent raised its estimate of 1995 losses to DM125m (pounds 55.4m) from the DM45m it forecast only a week earlier.

But Dixons recognises that the bulge in demand for personal computers and mobile phones is finite and that the City will soon start to wonder where earnings growth is to come from two to three years down the track.

The team is under instructions to consider diversification into areas in which the company's existing skills would be of use. That could lead it into unexpected areas. Circuit City, the biggest electrical chain in the US, has experimented with car sales, convinced that it has skills in aggressively selling complex products. There is no suggestion that Dixons is about to enter the car business, but the team has not ruled out anything.

Continental Europe is another possible area for expansion, probably in the core area of electrical retailing. Mr Clare is said to be a great admirer of Darty, the French electrical chain owned by Kingfisher.

Meanwhile, investment continues in the core businesses. Capital spending will be about pounds 90m this year and the expansion is expected to create 3,500 jobs.

The 200 Dixon stores still unmodernised will be refurbished over the next two years. The group has found that refurbishment significantly boosts sales.

Another 15 Curry's out-of-town superstores are due to open this year, bringing the store numbers to 220.

The Link is set for an aggressive roll-out, boosting store numbers from 45 to as many as 150 over three years.

Ten more PC World shed-style stores will be opened this year. Dixons currently has 25 and says there is scope for at least 50.