Dixons Retail Plc, the U.K.’s largest electronics retailer, rose the most five months in London trading after reporting a smaller first-half loss than analysts had estimated and an improving sales trajectory.
The so-called underlying pretax loss widened to 25.3 million pounds ($39.2 million) in the 24 weeks ended Oct. 15, the Hemel Hempstead, England-based company said today, less than the 30.1 million-pound average estimate of eight analysts. Sales at stores open at least a year fell 3 percent in the second quarter, after sliding 7 percent in the first three months.
“The beat will come as a relief,” Matthew McEachran, an analyst at Singer Capital Markets, said in a note. Still, the peak holiday season looks “increasingly difficult,” he said.
Dixons rose 7.1 percent, the biggest gain since June 22, to 10.02 pence. The shares have fallen 56 percent this year on concern that the retailer will be among the worst affected by reduced consumer spending as shoppers cut back on purchasing larger items such as televisions. Chief Executive Officer John Browett said today he’s “cautious” about the economic outlook.
U.K. same-store sales fell 5 percent in the second quarter, improving from the first quarter’s 10 percent decline. Dixons’ first-half loss in the country contracted to 3.9 million pounds from 10.7 million pounds a year earlier.
Browett said Dixons increased its share of a consumer-electronics market that declined 7 percent to 8 percent in the first half, helped by a good “back to school” period.
Apple Inc. iPads and Beats by Dr. Dre headphones will be strong sellers over the holiday, he said on a conference call.
“Peak trading has been up every year” since 2007, the executive said, adding that he expects “very strong” Christmas business. “The issue is, however, what the run into Christmas and out of Christmas will be.”
December retail sales in the U.K. may stagnate this year, the first holiday with no growth since 2008, according to Deloitte LLP. Philip Green, the billionaire owner of Arcadia Group Ltd., said today that he sees a “slightly softer” Christmas this year as subdued market conditions stint sales.
Dixons reported improved sales growth in the Nordic region, where its Elkjop chain is the largest electronics retailer. Same-store revenue rose 6 percent in the second quarter, compared with 4 percent in the year’s first three months. Profit in the region declined to 42.1 million pounds from 45 million pounds a year earlier as Elkjop discounted to gain business.
Economic turmoil in Europe as the region acts to address a debt crisis is “not helpful to our business,” Browett said.
“There’s no panic across our customer base,” he said. “People are a bit more cautious though.”
Dixons said it’s on target to reduce costs by 60 million pounds this year, as part of a three-year plan to cut expenses by 150 million pounds.