Upbeat Dixons to dump conventional television sets this year

The arrival of the digital revolution will spell the end of "big, bulky" televisions and portable CD players by next Christmas, the chief executive of DSG International predicted yesterday as the owner of Dixons reported strong Christmas sales.

John Clare said cathode-ray tube (CRT) televisions would follow VHS recorders and 35mm film cameras into the dustbins of Dixons' technological history this year, replaced by flat-panel sets. Only a few, 14-inch portable sets would remain, he forecast.

His comments followed a surge in demand for new technology products from MP3 players to satellite navigation devices over Christmas, helping the group to fight off competition from supermarkets and internet rivals and top City forecasts. Shares in DSG shot 4 per cent higher to 170.5p.

Underlying group sales rose 2 per cent over the eight weeks to 7 January, boosted by an 8 per cent gain at Dixons and 3 per cent increases at Currys and PC World. Gross margins were in line with last year. Only The Link, its struggling mobile phone chain, dragged down the group with a further 28 per cent slide in like-for-like sales.

DSG has been battling the twin demons of weak consumer confidence and price deflation but looked to be winning its fight over Christmas. A 111 per cent rise in unit sales of flat-panel televisions over the period was complemented by a 90 per cent rise in the value of sales, despite dramatically lower prices. Mr Clare said the death of old technologies such as "big, bulky" televisions would help to stabilise average selling prices. Fewer than one in five televisions sold during the past eight weeks were CRT sets, reversing the trend 12 months ago when sets accounted for four out of five TV sales.

The Christmas trading update came as the group announced a drop in interim profits after a dire few months for the white-goods market. Pre-tax profits for the 28 weeks to 12 November fell 21 per cent to £106.1m after UK operating profits from its electricals division collapsed to £2.2m from £13.9m the previous year. Mr Clare reiterated his caution about the prospects for the UK, Greek and Italian markets. But he said 2006 should be better for consumer electronics thanks to the stream of new products flooding the market.

The group also announced plans to trial a chain of stores to help computer-illiterate Britons. It will open 10 stores under a new trading name - Press F1 - over the next year to expand the customer help services offered at its PC World stores.