May 10, 2012 / 7:01 AM / in 6 years

UPDATE 2-Dixons sales rise despite slump at rivals

* Sees FY profit of 65-70 mln pounds, near top end of expectations

* Q4 group like for like sales up 5 pct, UK/Ireland up 8 pct

* Sees business environment uncertain, to control costs

By Drazen Jorgic

LONDON, May 10 - Dixons Retail, Europe’s second-biggest electrical goods retailer, posted better than expected fourth quarter sales on Thursday despite the slump hitting rivals.

At the core business in Britain and Ireland, where Dixons has revamped two-thirds of its shops during the economic downturn, like-for-like sales rose 8 percent in the fourth quarter compared to analyst forecasts of 2-4 percent growth.

Its expectation of pretax profit of 65-70 million pounds ($105-$113 million) in the year to April 28 was near the top end of market forecasts.

New chief executive Sebastian James put the sales growth down to troubles at competitors such as Comet and Argos as well a switch to digital television in the southeast of England and the success of Apple’s new iPad.

But he stressed the uncertainty of the business environment and said Dixons, which also trades as Currys and PC World in Britain, would “manage costs aggressively”.

“There has been some disarray amongst our competition. There is no doubt we have benefited from that,” said James, who succeeded John Browett in February after he was poached by Apple .

Shares in Dixons have risen 56 percent over the last six months and were up almost 4 percent at 1522 GMT.

Britain’s No.2 electricals retailer Comet was sold to investment fund OpCapita last November, while Argos last week reported an 9 percent slump in full year sales.

“Dixons has genuinely improved its offer, its stores and its operations during the consumer recession,” said Philip Dorgan, retail analyst at Panmure Gordon, keeping a ‘buy’ rating.

The fourth quarter also saw a strong performance from Dixons in northern Europe, particularly in Nordic countries where the firm trades as Elkjop, with like-for-like sales up 10 percent.

“Dixons is close to being last man standing in its two core markets, UK and Scandinavia,” said Seymour Pierce analyst Freddie George.

But like-for-like sales in the southern Europe division, which includes UniEuro in Italy and Kotsovolos in Greece, fell 9 percent, hit by fallout from the eurozone debt crisis.

James said the firm has contingency plans in place for Greece where Dixons has 25-30 percent of the consumer electronics market. He said that if Greece were forced to leave the euro zone that could even benefit Dixons.

“We know it would put paid to quite a lot of our competitors and give us an opportunity to get more of a market share,” he said.

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