Currys owner scales back investment

Consumer electronics giant DSG today said it planned to cut capital expenditure by around £30m this year as part of efforts to deal with deteriorating consumer confidence across Europe.

The move by the PC World and Currys owner came as it reported a 7 per cent drop in like-for-like sales for the six months to 18 October. The figure was in line with market expectations and included a 7 per cent drop for the company's UK & Ireland electricals business.

Chief executive John Browett said: "The trading environment continues to be tough."

DSG said PC World suffered in the current climate, with comparative sales down 11 per cent in the first half.

Margins across the group fell 0.7 per cent year-on-year in the period, with operations across Europe mirroring the tough UK environment. Sales declined 6 per cent in the Nordic region and 10 per cent in Southern Europe on a like-for-like basis.

Mr Browett added: "We are very focused on managing through this by reducing costs and improving our cash position."

He said the group's renewal and transformation programme was also "generating returns ahead of initial targets".

As part of the plan, the group opened a newly refurbished 55,000 square foot Currys megastore near Birmingham last Thursday, which saw over 3,000 shoppers queue up for bargains at the opening sale.

The store re-opening is seen as part of DSG's fight-back to incoming competition from US firm Best Buy's planned assault on the market.

Under its joint venture with Carphone Warehouse, the American giant set out plans last week for four or five electronics megastores in the UK next summer.

But DSG also plans to open 40 new format PC World stores by mid-November, plus 7 Currys and 4 Currys.digital new format stores. It said the £30m cut in capital expenditure will be focused on areas of "lesser priority".

DSG is the latest retailer to report tough conditions in recent weeks.

Yesterday the owner of Homebase, Home Retail Group, slashed £542m from the value of the struggling DIY chain and also warned of the impact of recent financial events on profits.

Home Retail Group said it would cut costs and investment in Homebase as the economic outlook deteriorates.