Currys and PC World owner says it expects to benefit from the demise of Comet as its UK business swings into profit after a £6m loss last year
Currys and PC World owner, Dixons Retail, said it expects to benefit from the demise of Comet as its UK operations returned a profit for the first time in five years.
However, poor sales in its southern Europe branches due to the eurozone crisis and a £42.5m writedown of its online gadget business, Pixmania, saw the company slump to a £79.5m pre-tax loss in the six months to October, compared with a £2.4m profit a year earlier.
Chief executive Sebastian James said: "We were particularly busy during the sporting and cultural events during the summer. While August and September were, as expected, a bit quieter, we remain cautiously optimistic about the outlook.
"We are outpacing our competitors, and have seen Comet enter administration in the UK and Expert exiting the market in Sweden."
Comet could be wiped off the high street within weeks unless a buyer is found to save the stricken business. On Wednesday administrators from Deloitte said 125 stores would start closing from Monday, with the remaining 70 under threat. Around 3,500 jobs have gone, with 1,000 left. Administrators added that a buyer was looking "unlikely".
As a result of Comet's collapse, Dixons' share price has soared, trading at a three-and-a-half year high. Dixons has also offered temporary Christmas jobs to some of those left unemployed by Comet.
Revealing its results on Thursday morning, Dixons said: "We have seen further consolidation in the UK & Ireland market, most notably with Comet entering administration since the end of our first half. 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."
The company's UK business was particularly impressive, with sales up to £1.59bn for six months, from £1.57bn during the same period last year. It meant underlying operating profit was £5.6m, from a £6m loss in 2011 – the first time in five years.
This came at a cost though, with 42 stores closed since the beginning of the financial year, with up to 98 more set to shut, leaving a total of between 400 and 420 sites. Many of the separate standing PC Worlds and Currys were combined into one store, with many undergoing an upgrade and redesign.
Sales were up 3% in the UK, however, at its operations in some of the hardest-hit European areas of Greece, Italy and Turkey, sales fell 9%.
But the biggest hit was taken on its online retail Pixmania business, particularly in France where it ended a licensing agreement with French firm Bouygues Telecom.
Dixons has bought the remaining stake in the company that it didn't own and taken on day-to-day running of the struggling business.
It said: "Sales and profit performance has been poor ... It is clear that Pixmania requires significant attention to improve its financial position.
We have quickly initiated steps to significantly reduce the complexity and costs of the business and to enable Pixmania to focus on core activities. The actions being undertaken, in compliance with local laws, will take time. We believe these steps are necessary to improve the financial position of Pixmania going forward."
Meanwhile, there was some positive news in the UK retail sector as B&Q owner, Kingfisher, saw sales in the country increase 5.7% during the three months to end of October, compared with a year earlier.
However, poor sales in France and a weak exchange rate saw overall revenues down 3.9% to £2.7bn, with profits hit by 5.9% to £257m.
B&Q saw a fall in sales of 4% to £906m due to, what it called "the generally weak consumer backdrop in the UK and a particularly challenging environment in Ireland."
But its Screwfix business saw sales jump 10.9% to £139m as it opened 12 new stores, bringing its total to 252.
Kingfisher chief executive, Ian Cheshire, said: "Our markets remain challenging, with consumer confidence still weak and so we maintain our strong focus on margin, costs and cash."
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