Spending slump leads to Dixons' second profit warning
Questions about John Browett's plans to shake-up and turn around the Dixons Retail group were being asked in the City today, as the company unveiled a profits warning that sent the shares into near freefall.
The outfit behind Currys and PC World is in the midst of an overhaul aimed at revitalising the business, with a focus on high levels of customer service and new stores.
Today it said profits for the year to April will be about £85 million, at the rock bottom of City forecasts.
The shares lost 18% to 13.75p. When Browett joined three years ago they were closer to £1.
Although the former Tesco man is still regarded as a skilled retailer, analysts are starting to ask if he will be able to complete the task before him, given competition from internet rivals and the state of the consumer economy.
Like-for-like sales are down 7% in the past 11 weeks.
Browett himself insists the wider plan remains on track. The group's Italian arm is improving and Nordic parts of the business continue to "perform strongly", he said.
"Consumer confidence across some of our markets is fragile and we expect it to continue to be so through much of 2011," he added.
The group set out a four-step plan to respond to its difficulties: a review of its Spanish operations, targeting expenditure on its highest return projects, focusing on cash generation and cutting costs.
Kate Calvert at Seymour Pierce remains a fan.
She says: "Management has done a great job of rebuilding its UK market leadership position and strengthening for the future."
Dixons claims that its market share is actually rising. If true, this suggests that Comet and others are having an extremely tough time.
The surprise statement today follows one in January, when Dixons warned profits for the current year would be at the lower end of forecasts after Christmas trading was hit by adverse weather.
