Dixons reports huge losses of £224m
One-off charges and consumer meltdown batter PC-peddler
Dixons Retail this morning reported whopping losses of £224m for fiscal 2011, after absorbing one-off charges for shutting up shop in Spain and goodwill write-downs of its Greek and online operations.
Total group sales for fiscal 2011 ended 30 April including businesses to be closed or already closed fell 2.2 per cent to £8.3bn, losses included £309m worth of exceptional items as profit before tax tumbled 6.1 per cent to £85.5m. Underlying group margin went up just 0.1 per cent.
The impairment charges include £70.6m for the closure of PC City in Spain, and £53.2m and £106.3m respectively for the impairment of goodwill related to Kotsovolos in Greece and web shop PIXmania.
On top of the charges Dixons had to swallow on the continent, business closer to home provided little cheer. UK and Ireland sales were down five per cent on a constant currency basis to £3.8bn as operating profit remained flat at £71.3m.
In spite of the first half sales spike in TVs due to the World Cup and an exclusive deal for Apple's iPad, yearly sales were dragged down by a seven per cent in the second half of the year on the back of weakening consumer spending.
By contrast, the Nordics proved to be a pretty good stomping ground for Dixons with sales bouncing eight per cent to £2.3bn and underlying operating profits up by the same amount to £106m, with further store expansion planned across the region
The international division - comprising Italy, Greece, the Czech Republic, Slovakia and Turkey - saw sales dip two per cent to £1.2bn with the Hellenic economic turmoil and a subdued spending environment in Italy not quite offset by better performances in the other countries.
Online sales - PIXmania and dixons.co.uk - fell nine per cent to £842.7m and underlying operating profit dived to £900,000 from £11.3m a year earlier. Dixons said the reasons for the drop included disruption caused by integrating a new platform in the UK and falling consumer confidence.
John Browett, chief executive at Dixons Retail, said in a statement: "Maintaining sales, margin and profits is a good performance in such challenging conditions. We are consistently outperforming our markets and gaining share."
The previously loss-making B2B operations including PC World Business and Equanet did not get a mention after being folded into the total UK and Ireland numbers in 2010.
The outlook remains challenging, said Dixons. ®