Dixons hopes to see growth following its rivals' demise

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The Independent Online

The chief executive of Dixons Retail will make good on a promise that the owner of PC World and Currys would capitalise on the demise of Comet with strong trading figures this week.

Sebastian James said late last year that the collapse of the 236-strong Comet chain would be "helpful from a market share perspective". Dixons should also benefit from camera chain Jessops being forced into administration last week.

Dixons' British sales fell during the 2011/12 festive period, so investors are hoping that less competition will have resulted in growth this time around. Also, VAT changes distorted the previous Christmas and new year results.

Dixons has already reaped the benefits of fewer rivals as US retailer Best Buy recently shut up shop in the UK. Despite this, high promotional activity over Christmas is likely to have kept profit margins constrained and investors will be keen to see if there is any improvement at its online PIXmania business.

The Nordic and UK chains should report reasonable Christmas trade but the thorn is its struggling southern European business. Declining sales will have continued, offsetting gains made in other parts of the group.

Caroline Gulliver, an analyst at Espirito Santo, said: "Coming on the back of Comet's administration, we would expect Dixons to take further market share, as it arguably has the most comparable service proposition to Jessops (as opposed to say, Argos), as well as a similar range."

Argos's owner, Home Retail Group, is also due to announce its Christmas trading update on Thursday. Although the group could see some benefit from Comet's failure, one of the main boosts to sales, according to analysts at Hargreaves Lansdown, could be Tesco's focus on reviving its core UK food business leaving Argos and Homebase a clearer run at non-food markets.