Dixons Retail share price down on FTSE 250 as losses halved

Shares in Dixons Retail were down on the FTSE 250 in afternoon trading after the retailer said it had more than halved its losses in the half year ended 16 October.

Total group sales were reported as rising slightly from £3.33 billion in the same period last year to £3.35 billion. Like for like sales rose one per cent in the period.

The group said that it made an underlying pre-tax loss of £7.9 million, down from £17.6 million in the same period last year. Net debt however was broadly unchanged from the end of 2009/10 at £215.1 million.

Dixons said that it had seen good progress in Britain, Ireland and its Nordic operations. Improvements were also reported in its Italian business and the group said it had grown market share in Greece despite the "challenging environment".

During the period the group continued with its store transformation programme, with 62 of its new "Megastores" now operating across the group. The group also said it was on track to deliver cost reductions of £50 million, as part of its plan to reduce costs by £150 million over three years.

John Browett, Chief Executive of Dixons Retail, said, "Our complete focus on our customers and on consistently delivering Value, Choice and Service continues. We remain cautious on the economic outlook across many of our markets, as consumer confidence remains low. However, we have maintained our momentum in transforming the Group and are performing ahead of the market. We have a proven store format that is delivering consistent gross profit uplifts across all our markets. We remain excited by the technology pipeline and the superb ranges and deals we will offer customers this Christmas."

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented, "The company remains a work in progress, although there are some encouraging signs in the midst of a major turnaround at the group.

"The revamping of a number of stores has fed through to a strong uplift in gross profits at those stores, whilst the cost cutting programme remains on track. The internet channel continues to grow, whilst the traditionally much stronger second half of the year is yet to come, meaning that Dixons should be well positioned for a decent overall annual performance. On the other hand, competition remains intense from the likes of Kesa and Best Buy, let alone the pure internet retailers. The macro economic environment was also acknowledged by management as casting a shadow over future prospects, whilst there does not yet seem to be any plans to resume the dividend payment.

"The shares have struggled to impress over the last year, having fallen 27% versus a wider FTSE250 gain of 17%. The performance over the last three months has been in line, albeit from a lower base. Investors are giving the stock the benefit of the doubt as a recovery play, with the general market consensus coming in as a buy."

By 12:50 shares in Dixon Retail were down 0.30 per cent on the FTSE 250 to 26.52 pence per share.