Dixons shares fall after sales figures disappoint

Shares in Dixons dived 8 per cent after the electrical retail group disappointed the City with a fall in sales in the first four months of its financial year, despite a generally booming retail environment.

Shares in Dixons dived 8 per cent after the electrical retail group disappointed the City with a fall in sales in the first four months of its financial year, despite a generally booming retail environment.

The group, which owns the Dixons, Currys, PC World and Link retail chains, said like-for-like sales for the 18 weeks ended 1 September had slipped by 1 per cent.

Sir Stanley Kalms, the group's chairman, told shareholders at its annual meeting that falling demand for mobile phones and personal computers was to blame.

"Sales of games, large screen TVs and digital imaging were strong but, as expected, mobile phones and desktop PC sales were weaker," Sir Stanley said in a trading statement. He refused to extrapolate what these trends meant for the rest of the year's trading.

Analysts criticised Dixons for failing to move away faster from the pre-paid mobile phone market. One analyst, citing a near double-digit decline in like-for-like sales of mobile phones at the Link, said Dixons should have spotted the trend earlier.

"Back in May, the networks said they would slash the subsidy on pre-paid phones. Dixons should have tried to move its product mix to contract phones sooner," he said.

Shares in Carphone Warehouse, the market leader, slumped in response, falling 8.5p to 92.5p. Dixon's stock lost 17.25p to close at 202.75p.

A company spokeswoman was defensive. She said sales at PC World were cushioned going forward because of the range of computer accessories that it sells. She expected the launch later this year of Microsoft's new Windows XP operating system to drive sales in the autumn.

"Only 35 per cent of households own a computer, which is only one in five adults. We will see families networking their homes, as well as more in the way of upgrades," the spokeswoman said.

Sir Stanley added that while the economic outlook was uncertain, the group's new concept Dixons and Currys stores were performing strongly and international expansion was progressing well. The new stores are expected to help boost margins by selling more branded goods.

The refurbishing programme also impacted sales. Up to 12 Dixons stores were closed at any one time.