Mobile and PC sales spark Dixons surge

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DIXONS, the electrical retailer whose shares have soared on the success of its Freeserve Internet access service, enjoyed a further boost yesterday when the company reported increased interim profits, a solid Christmas trading statement and the creation of 2,000 new jobs.

Dixons shares, which have risen by more than 70 per cent since October, added 44p to close at 958p yesterday when the company said same-store sales in the eight weeks covering Christmas and New Year were 3 per cent higher than in the same period a year ago.

The figures were supported by strong sales of personal computers, which have fallen dramatically in price, as well as robust sales of mobile phones, digital cameras and PC software. "Traditional" electrical goods such as washing machines and fridges have performed less well. Sales of analogue television sets and video recorders have also been weak as shoppers wait for new digital versions to become available.

John Clare, Dixons' chief executive, said: "Consumers have got the money but they lack confidence and fear a slowdown. If you've got new products that are exciting, then they will spend. But they won't spend their money on replacement products."

Price deflation has been a significant factor in the electricals market, particularly in computers and audio-visual products. This has led to increased sales but lower margins, which fell by half a percentage point.

Mr Clare said PC prices before Christmas were ranging between pounds 700 and pounds 800. Now they are down to as low as pounds 500. Over the year, Dixons' average PC transaction price had fallen from pounds 1,200 to pounds 800. For video recorders and remote-controlled TV, prices are now as low as pounds 90.

Pre-tax profits in the six months to 14 November were up by 5 per cent to pounds 81m, excluding exceptional items. Exceptional charges totalled pounds 12m, including pounds 10m for the integration of the Seeboard retail operation bought in June last year. Retail sales increased by 11 per cent to pounds 1.4bn. The interim dividend was increased by 21 per cent to 3.5p.