Why is it in the news?
The high-street consumer electronics retailer will report full year results next week.
Will they be good?
Very. Profits will probably be a third higher than last year. Interest rates are low and customer confidence is rising. All they need is another football extravaganza.
You're a bloke, right. It's Euro 96, England vs Germany, you don't have tickets to Wembley and all you have at home is the 26-inch screen with the fuzzy reception.
What do you do?
Nip down to Dixons and buy a 48-inch monster?
Then stock up on beer and invite your mates round.
And the Olympics?
Probably not quite as big a deal. Most sports fanatics will still have the telly they bought for Football's homecoming.
So the future's not as bright?
Oh yes, everyone's optimistic. In fact, we're so confident of Dixon's performance that we'll warranty it, for a small fee.
Why would you warranty profits?
Well, it would be fitting. After all, the profits are mostly from warranties. Long-term ones.
Dixons, like a lot of other consumer electronics retailers, has very low margins on the equipment it sells, and relies on lucrative long-term warranties to rake in the cash.
Are the warranties necessary?
For Dixons, yes, they gross about pounds 100m. For customers, no. Most electronic equipment is pretty durable, and the up-front premium is usually far higher than any repair costs are likely to be.
Can't customers just say no?
You haven't met Dixon's salesmen. They're persuasive.
But if this is so bad for customers, why is it allowed?
It may not be for much longer. The Office of Fair Trading is examining the issue right now.
What could the OFT do?
It's already threatened to impose stiff disclosure requirements if retailers don't snap into line.
They would have to display how much warranties cost, and what the benefits would be. Don't expect the notices to be as eye-catching as the SALE signs.
Is there any hint the threat is working?
Surprisingly yes. At least according to analysts. NatWest's forecast includes assumptions that margins on warranties will be lower this year.
Still, everything else is humming like a microwave.
No, not entirely. There is the minor problem of the pounds 33.7m it lost in the US.
Even during the World Cup?
It didn't work quite the same over there. Besides, Dixon's problems with Silo started earlier. In 1993, it sold the loss-maker to Fretter, which put the company into Chapter 11 bankruptcy protection and paid Dixon's no dividends.
Yup, they should have taken out a warranty on the deal.Reuse content