DIXONS RETAIL, the largest British consumer-electronics retailer, said profitability improved at home after it sold more products at full price over Christmas.
Gross margins, or profit as a percentage of sales, widened by 0.4 percentage points in the UK, and were unchanged for the entire business, the retailer said. Dixons also said sales declined at a more moderate pace over Christmas and rose in the last two weeks.
“This was a solid performance from Dixons in what remains a testing market environment,” said David Jeary, an analyst at Investec Securities. The unchanged gross margin was “a very good performance in our view”.
Mr Jeary has a “hold” recommendation on the shares. The stock rose 11 per cent to 10.94p, the steepest gain since May.
Sales were boosted by products such as Amazon.com's Kindle e-reader, with one being sold every three seconds over the holiday, Dixons said.
Profitability was also helped by increased demand for so-called KnowHow services such as computer-software installation.
Sales at UK and Irish stores open at least a year fell 7 per cent in the 12 weeks ended January 7th, the company said, an improvement on the 8 per cent decline reported for the first half of the financial year ended October 15th.
Domestic same-store revenue rose 23 per cent from January 4th to January 14th, compared with a period of last year when sales were hurt by an increase in the United Kingdom VAT rate.
“This is a solid performance against a challenging backdrop,” chief executive John Browett said. “Consumer confidence in many of our markets remains fragile and we will maintain a cautious approach to the outlook for the year ahead.”
The British Retail Consortium has forecast an “equally challenging year” for UK retailers in 2012 after promotions drove a 2.2 per cent gain in December sales.
Best Buy said in November that it plans to exit the UK, while the competing Comet chain has been sold to private-equity firm OpCapita LLP.
“It is obviously helpful that we’ve had some competitors withdraw from the UK or are in serious trouble,” said Mr Browett. – (Bloomberg)
