* Pays Germany's mutares 69 mln euros to take PIXmania
* Sells Turkey ops for 2 mln pounds
* Q1 underlying sales up 2 pct, in line with forecasts
* Shares rise up to 10 pct
(Adds detail, CEO, analyst comment, shares)
By James Davey
LONDON, Sept 5 Dixons Retail, Europe's
second-biggest electrical goods retailer, is to pay 69 million
euros ($91 million) to Germany's mutares to take the
loss-making PIXmania e-commerce business off its hands.
Shares in the group, which have more than doubled over the
past year, rose up to 10 percent on Thursday on the PIXmania
deal and news of a withdrawal from Turkey - actions in line with
Dixons' plan to focus on markets where it has a leading
"multi-channel" position with a combined stores and internet
PIXmania, which operates in France and the Czech Republic,
employing about 850, saw underlying sales slump 28 percent in
the first quarter and has been dragging down the performance of
the wider group as it battles difficult markets across Europe.
While the internet has been a boon for many retail sectors,
online sellers of electrical goods have often struggled to
provide the service levels required by customers and have faced
stiff competition from stores and "multi-channel" operators, as
well as U.S. e-commerce pioneer Amazon.
In June Dixons, also home to the Currys and PC World chains
in Britain, Elkjop in Nordic countries, UniEuro in Italy and
Kotsovolos in Greece, booked restructuring and impairment
charges of 168.8 million pounds ($264 million), relating mainly
to PIXmania and the disposal of its Equanet business.
Dixons has received an irrevocable offer from German
industrial holding company mutares to purchase PIXmania. The
deal, which is subject to up to four months consultation with
PIXmania's French works councils, would see Dixons provide the
cash to support mutares's plan to develop the business.
"PIXmania operates in countries where we're not market
leader and operates a (single channel) model that is not ours. I
don't think we're particularly good at running that kind of
business," Chief Executive Sebastian James told reporters.
"We do best when we stick to our knitting," he added.
Dixons has also agreed to sell its loss-making 32-store
ElectroWorld operations in Turkey to local specialist Bimeks
for about 2 million pounds.
"That just leaves Italy to sort out, assuming Dixons keep
Greece," said independent retail analyst Nick Bubb, adding the
amount of dowry paid for PIXmania was "very acceptable".
John Cummins, analyst at WH Ireland, raised his earnings
forecasts for 2015 and 2016 by 18.5 percent and 13.3 percent
News of the disposals came as Dixons posted a rise in
first-quarter sales with growth in Britain and northern Europe,
driven by robust demand for tablet computers, offsetting
continued weakness in southern Europe.
Sales at stores open over a year rose 2 percent in the 12
weeks to July 31, though gross margins fell 0.4 percent, in line
with analysts' expectations.
Like-for-like sales were up 6 percent in the UK and Ireland
and grew 5 percent in northern Europe. But they fell 12 percent
in the southern Europe division, made up of Italy and Greece.
Across Europe many store groups are still struggling as
government efforts to bring down national debts reduce
consumers' disposable incomes. Electrical retailers have been
particularly exposed because they sell discretionary goods and
face intense competition from supermarkets and internet giants
like Amazon and eBay.
But in Britain Dixons has benefited from a tablets boom, as
well as the demise of rival Comet and problems at Jessops and
HMV. It has also been cutting costs, revamping stores and
seeking to improve products, prices and service.
James said that despite recent surveys and data showing
improved economic conditions in Britain he remained cautious on
the state of the market for the year ahead.
Shares in Dixons were up 3.34 pence at 47.68 pence at 1005
GMT, valuing the business at about 1.7 billion pounds.
($1=0.6399 British pounds)
(Editing by Greg Mahlich and Mark Potter)