Vista launch jamboree leaves PC World with indigestion
Hardware promos undermine margins
Microsoft’s damp squib launch of Vista has left PC World with an over-stock headache, parent DSGi confirmed today.
The electronics retail giant, in its interim management statement, reported overall revenues up 11 per cent for the 16 weeks ending August 18, or 6 per cent on a like for like basis.
Sales at its computing division, which includes PC World, were up 7 per cent, or 5 per cent like for like. However, growth was overwhelmingly concentrated outside the UK, at 22 per cent, while the UK computing business grew just 5 per cent, or 6 per cent like for like.
CEO John Clare said that PC World “delivered strong sales growth, however gross margins have been materially impacted as a result of increased promotional activity to reduce one-off hardware stock levels that resulted from lower than expected demand for Vista products.”
To put it another way…hell, there’s no need to put it another way.
Looking at the overall electronics market, Clare said despite the good start to the year, the company would "remain cautious about he outlook for the consumer in the UK and across much of the rest of Europe in a higher interest rate environment."
In its most recent results, DSGi reported full year revenues of £7.9bn for the year to 28 April, up 14 per cent on the year. Pre-tax profits were £114.1m, down on the previous year's £295.9m.®