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Profits fall at Dixons

New boss James set to boost customer service investment
  • @Thompj

The new chief executive of Dixons Retail will flesh out his strategy for the Currys owner this week, with full-year profit expected to be down by a fifth.

Sebastian James will provide an update on the early impact of the Euro football tournament on sales of TVs and laptops, but that comes too late to rescue poor figures.

However, they are still likely to compare favourably with those from Home Retail's Argos and the former owner of the Comet chain this week.

Kesa Electricals – which owns the Darty chain in France and sold Comet to the investment house OpCapita for a token £2 in February – is set to post a full-year loss after exceptional items. This follows hefty trading losses at the UK electricals retailer and the €50m (£40.3m) dowry it paid to OpCapita to take Comet off its hands.

The electricals sector has been battered by the downturn in consumer spending over the last four years and the moribund housing market, which has always been a key driver of sales of new TVs, stereos and white goods.

Dixons Retail, Europe's largest electricals retailer with 1,200 stores in 13 countries, is expected to see a 20 per cent fall in underlying, pre-tax profit to £68m for the year to 28 April, according to analysts at Nomura.

Mr James is likely to commit to further investment in customer service and provide an update on its struggling businesses in Italy and Greece.

However, the moves might not be as dramatic as some investors would like: Mr James is expected to stress his strategy will be focused on evolution, not revolution.

Kesa will report underlying profit is down by 38 per cent to €58m. However, the dowry it paid to OpCapita and other exceptional items related to the disposal of Comet will contribute to Kesa posting a pre-tax loss.

Home Retail is expected to say Argos' underlying sales fell by 4 per cent in its first quarter, although this represents an improvement on the 8.9 per cent slump last year.

Richard Cathcart, an analyst at Espirito Santo, said: "Overall, we think trends are likely to be broadly unchanged at Argos, with electricals the main driver of weakness in sales."

While the current European football tournament and this summer's Olympics are likely to benefit all the market's players, those selling larger-screen TVs, such as Dixons and John Lewis, will get the biggest boost.