The owner of Currys and PC World has warned that annual profits are expected to be at the bottom end of forecasts after snow-hit sales fell 4% in the UK and Ireland over the festive period.
Dixons Retail Group said the adverse weather wiped around 2% off like-for-like sales in the 12 weeks to January 8, which left Christmas trading well below last season’s 8% like-for-like improvement.
Shares in Dixons dropped 9% as the retailer said profits were now likely at the lower end of forecasts, at between £100 million and £110 million.
But Dixons said the UK had performed well despite the extreme weather.
John Browett, group chief executive of Dixons, said: “Peak trading has been solid in a tough market. The adverse weather conditions reduced footfall in the run up to Christmas Day. We saw strong trade in the post-Christmas sale as customers were keen to take advantage of our great deals on 3D TVs, Apple products, tablets and white goods ahead of the rise in VAT in the UK.”
The firm, which has 650 shops in the UK and around 1,275 worldwide, revealed a far better performance in its Nordic business, with same-store sales soaring 11%. But sales dropped 5% across other international markets as economic woes in Greece and Spain impacted on trading, leaving group like-for-like sales down 2%.
Analysts at Investec Securities said the group-wide performance was better than feared given the tough comparatives last year. They put faith in the company’s transformation plan to revamp outlets and roll out large combined megastores, commenting: “We remain buyers, given the longer-term self-help programme and the technology cycle.”
Dixons is more than two-thirds of the way through a three-year revival plan, which will see it reduce its UK shop estate to around 500 to concentrate on larger formats. It has refitted around 250 stores and is also launching combined PC World and Currys outlets, with 25 under the megastore format. The group plans to double the number of out-of-town megastores to 50 this year.
Mr Browett said: “We remain cautious about the economic outlook across our markets, but we will continue to deliver on our renewal and transformation plan as we make the business better, easier and cheaper to run.”
The group said it found internet sales were boosted at PC World and Currys as snowed-in shoppers bought online instead, with multichannel sales up 8% in the festive quarter. But this trend hit online-only brands Dixons.co.uk and PIXmania, with e-commerce sales down 7%.