Dixons shares rise despite pounds 165m loss: Market fails to react to poor figures prompted by sale of troubled US chain

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SHARES in Dixons shrugged off the company's plunge into the red yesterday, rising 14p to 184p after the electrical retailer announced an 11 per cent improvement in sales since its April year-end.

The reversal of last year's pounds 33.5m profit into a pounds 165.2m loss had been widely expected after the disposal of Silo, the loss-making US retail chain.

Following a reduction in gross margins, underlying profits before exceptional items were slightly lower despite a 10 per cent rise in sales from UK retailing operations.

John Clare, chief executive, said conditions had improved since the January to May period, which he described as the worst he had experienced in the industry.

He warned, however, that the market remained highly competitive.

There had been a marked increase in interest-free credit promotions, deflation in many product prices and a rise in sterling purchase costs, many of which are dollar-denominated.

He refused to break down the profits contributions from the three retail chains - Dixons, Curry's and PC World - but said the computer superstore had made a good early contribution to profits. There was an increase in extended warranty sales.

Turnover at Dixons suffered from a decline in sales of computer games and camcorders in the run- up to Christmas. Sales fell 1 per cent to pounds 520.5m, representing a 3 per cent like-for-like reduction.

Mr Clare said television, video and audio products had moved ahead. He added that Dixons had gained a significant share of the growing mobile telephone market.

The programme to move Curry's away from town centres continued with the opening of 27 superstores, taking the total to 158. The 200 remaining high street Curry's shops are expected to be phased out over the next two years while the number of out-of-town outlets is expected to rise to 250.

Sales in Curry's superstores reached pounds 462.5m, a 25 per cent absolute increase, up 7 per cent on a like-for-like basis.

On the high street, Curry's sales were pounds 316.9m, a 7 per cent decline or 1 per cent on a directly comparable basis. An exceptional charge for closures of pounds 20m was included in the figures for the year to April.

That contributed to a fall in operating profits from pounds 66.6m to pounds 44.1m, struck from sales 3 per cent lower at pounds 1.92bn.

The pre-tax loss also reflected the cost of consolidating the group's administrative offices in one site and the termination of the group's UK property arm.

There was a loss per share of 44.1p (6.5p loss) and final dividend of 4.9p for a full-year total of 6.6p (6.2p).