Dixons sees major competitor disappear but there is trouble brewing in the group's 'southern Europe' division
The last man standing theory of retailing says that, just by staying upright in the internet storm, there should be a decent living left for the single survivor among high street specialists. It's never been terribly persuasive since HMV and Waterstones continue to struggle even after the disappearance of Woolworths, Borders, Zavvi, and others. But how about Dixons? Will life be easier in a post-Comet world?
Up to a point. Seeing your major competitor disappear, or at least shrink substantially, has to be helpful. Comet has annual sales of £1.2bn so, if Dixons can grab just a fifth of the spoils, its stores should get a £240m uplift.
Crucially, this gain should come at decent profit margins since the rent on the stores has to be paid anyway. Seymour Pierce's analyst calculates that Dixons should enjoy an extra £29m in operating profit at least. Very nice, especially as Dixons, after years of struggle, seems to have knocked its UK operation into better shape: today's £5.6m profit in the UK & Ireland was the first at the half-year stage for half a decade.
But this is no time for Dixons' new boss, Sebastian James, to celebrate rivals' woes. He's got a pile of his own troubles in the group's "southern Europe" division. The Italian operation is too small and the Greek business would be excellent if only it were in a different country.
But the worst of the lot is Pixmania, a monument to the former management's hubris in thinking it could get ahead in the internet game by investing in a French-based pan-European distributor of everything from electricals to jewellery. To no surprise, expansion in Albania, one of 29 countries served, has not made the numbers improve. Dixons has been obliged to buy full control of Pixmania in an attempt to impose order and stem losses. Do not expect a quick fix.
Still, Dixons is definitely a survivor. This year's big event was the repayment, via a refinancing, of a dangerous-looking bond. That represented substantial progress, and the share price had started to react even before administrators arrived at Comet. You could have bought into Dixons in January at 11p, so today's 25.7p makes the shares one of the top performers of 2012. But remember, once upon a time they traded at 280p. The internet, Amazon, and ill-judged expansion have taken a heavy toll.
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