Dixons weighs up European expansion

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The Independent Online
DIXONS IS considering spending the proceeds of the flotation of Freeserve, the market-leading free Internet service provider it set up last September, on establishing retail operations on the Continent. It also expects to create 3,000 jobs in the UK this year by opening more than 100 new stores.

"We are not floating Freeserve to raise cash, but it's a nice by-product," said John Clare, chief executive of Dixons. "We are thinking about investing it in continental Europe and we have a lot of decisions to make regarding whether we make acquisitions or go for greenfield sites. But we lost money expanding in the US and we don't have a unique product to offer like Marks & Spencer."

Dixons' rival, Kingfisher, which owns Comet, already has a presence in the continental electrical goods market through its subsidiary, Darty, the French equivalent of Comet.

All options were open on where the proceeds from the flotation would go, said Mr Clare, including returning cash to shareholders. "But we think shareholders would prefer us to invest it," he said.

The point of the flotation was to enable Freeserve to use its paper, expected to be highly rated, in the pursuit of acquisitions and joint ventures.

Freeserve's prospectus is due to be posted next week. "You will be surprised at how low Freeserve's costs are," Mr Clare said. Meanwhile, Dixons committed itself to creating 3,000 jobs this year. It created the same number last year by opening 116 stores, bringing its total to 987. It has created more than 8,000 jobs in the last three years, bringing its total workforce to 12,000.

The group said it expected to see last year's 20 per cent fall in the price of personal computers repeated this year. It expects to offset the fall with higher volumes.

Investment column, page 25