Downbeat Dixons tells shoppers not to expect Christmas bargains

The chief executive of DSG international, the former Dixons Group, has warned shoppers not to expect a sea of festive bargains despite unveiling a further slump in UK sales.

John Clare said: "There will not be a lot of panicked price reductions at the last minute." He predicted an "orderly Christmas" because retailers have slashed stock in anticipation of a weak festive season, which should cushion the damage if shoppers hold back. "We have purchased [stock] in line with the sales trend we're predicting. Overall we are slightly down on last year," he added.

Boots has said it will put less stock into its stores, while Matalan is thought to have cut its stock levels by 40 per cent.

Mr Clare said the retail downturn meant that weak chains would "get weaker or go to the wall", predicting a spate of bankruptcies for small and medium-sized rivals. This could pose risks for shoppers looking to save money by snapping up online bargains, he said.

DSG, which rechristened itself to try to deflect attention from its core UK business, revealed yesterday that trading across its UK chains had failed to pick up. In particular, The Link and PC World had another poor three months, with like-for-like sales plunging 28 per cent at the mobile chain and 8 per cent at the computer outlets. Both have been plagued by deflation, with the price of a standard PC falling to £299 from £399 last year and a bottom-of-the range laptop to £399 from £499.

At Dixons underlying sales fell 2 per cent, while the collapse in demand for fridges and washing machines continued to hit Currys, where like-for-like sales were 3 per cent lower than last year. Across the four chains, underlying sales fell 7 per cent in the UK. Shares in the group rose 1.5p to 152p on relief the update was not worse.

Mr Clare said he was "cautious" about prospects for the UK, which contributes 70 per cent of group sales, admitting there was no sign of a recovery. "Our markets are flat at best and well down at worst, but we're up for it and we're going to be taking market share."

Although certain products are flying off the shelves as quickly as Dixons can stock them - iPods and Sony PSPs - the surge in demand for new technologies is failing to compensate for the fact that sales of older products, such as CD Walkmans, have dried up. Mr Clare said the group took weekly deliveries from Sony and Apple but these sold out within "two or three days of hitting the stores".

He said DSG's top priority was to reverse the dire sales trend at The Link rather than reopen discussions with O2 regarding buying out the mobile phone operator's stake in the chain.

Across the group, which spans Greece to Norway, gross margins were flat, with the UK slightly stronger than the rest of Europe. Overseas like-for-like sales rose 4 per cent.