Business Week – Dixons powers up performance.

Analysts are upbeat about the future of Dixons ahead of its annual results announcement next Wednesday, after weeks of negative market sentiment and slashed profit forecasts that have pushed its shares down.

They are now saying that fears over a depressed electrical goods sector, putting the chain under pressure, were overstated.

Analysts at JP Morgan had cut their forecasts following Dixons’ losses in its French and Spanish start-ups and increased expenditure on e-commerce.

Merrill Lynch is the latest to upgrade the stock. It said the City was forgetting the group had lessened margin pressures.

It added that, although the PC market is under pressure, it still expects an 8% growth in the UK retail business.

A number of factors, including an ease in price deflation and competition, a better mix of products, and lower capacity, are expected to lead to growth in profits of about 10% in the results for the second half of the year.

Another big development for the electronics giant was the sale of its internet service provider Freeserve to Wanadoo. In January, shareholders agreed on the sale, in which Dixons sold Freeserve to the French ISP in return for a stake in it.

Two months later, Dixons raised EUR226m from a bond offering on 21% of its Wanadoo shareholding on the Euronext Paris market. The offering was increased after being oversubscribed four times.

Ian Livingston, the company’s finance director said: ‘As a result of the significant demand from investors, the size of the initial offering was increased and the book building process was completed in less than a single day.’

Chartered accountant Livingston joined Dixons from venture capitalist 3i. Previous employers include Arthur Andersen.

The company saw lower profits at its interim results for the 2000/2001 financial year ending in November. Pre-tax operating profits for the period totalled £56.5m compared to £62.9m the previous year. Despite this, chairman Stanley Kalms said profits from the UK retail sales were £74.2m, showing a growth of 1% on last year’s figures. The UK retail division had total sales of £1,845m in the first half of the 2000/2001 financial year, though growth was slower due to decreased consumer confidence following the petrol crisis and the floods during the period.

Dixons’ website is at


Interim results to November 2000

Total operating profit: £56.5m

Net outflow from operating expenses: £33m

Retained profit: £17.2m

Executive directors: Stanley Kalms, chairman, appointed 1971

John Clare, group chief executive, appointed 1998

Ian Livingston, group finance director, appointed 1998

Auditor: Deloitte & Touche

Company Profile: High tech consumer electronics retail giant established in 1937. Businesses include The Link, Currys and PC World, selling products such as video, television, audio, computer, and domestic appliances. Internationally, it has similar businesses in Greece, Spain and Norway, and it develops property in Belgium, Luxembourg and France. The company listed on the London Stock Exchange in 1962.

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