Financial News

  • 30 November 2012, 11:55

Dixons 'To Benefit' From Comet As Sales Rise

This year's summer of sport gives Dixons Retail Group a boost in the UK, as it prepares to benefit as a result of Comet entering administration.

Like-for-like sales at the retailer - which owns Currys and PC World - were up 3% in the UK for the six months to October 13, helping its UK and Ireland division post a profit for the first time in five years.

Dixons said it expects its market position in Britain to go "from strength-to-strength" following the collapse of its rival Comet, which called in administrators earlier this month.

"While there may be some disruption while Comet completes the 'fire-sale' of its stock in the short term, Currys and PC World will benefit from the consolidation and we look forward to re-investing further gains into the offer for customers," the company said in a statement.

Retail analysts Conlumino said there were crucial differences between the business models of Dixons and Comet.

"In the UK and Ireland, Dixons has given a great example of how to get back to basics and has been left with a leaner, more competitive business as a result," analyst Matt Piner said.

"Improvements to service and instore experience meant Dixons was able to compete against the rise of non-specialist rivals in a way that Comet was unable to."

He said Comet's collapse would provide some "much needed relief" for the company, especially in sales of tablets, smart televisions and small kitchen appliances.

"There will be further pain along the way but in two to three years time Dixons is likely to be a more efficient business excellently poised to capitalise on a market recovery," he added.

The group reported a loss before tax, including one off charges, of £79.5m - compared with a profit of £2.4m over the same period last year.

When these exceptional charges are deducted, its underlying loss before tax narrowed from £25.3m to £22.2m.

Dixon's chief executive, Sebastian James, said the company had made good progress in the first half of the year.

"I am particularly encouraged by our performance in the UK and Ireland and in Northern Europe and we were particularly busy during the sporting and cultural events during the summer," he said.

"While August and September were, as expected, a bit quieter, we remain cautiously optimistic about the outlook."

It comes after Comet's administrators, Deloitte, confirmed a further 125 shops would shut before Christmas, unless a last-minute buyer is found.

In response, Comet's former owner, OpCapita, spoke out for the first time since the chain collapsed.

"We are sorry for all the Comet employees who have served the business and customers with great loyalty and have lost their jobs at such a difficult time," the firm said in a statement.

"OpCapita... did their utmost to revive the loss-making Comet business, but a combination of adverse factors, including the withdrawal of credit insurance and the consequent reluctance of suppliers to supply the business on normal terms meant it became impossible for the business to carry on trading."

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