Dixons' shares bounced, despite the company reporting a deeper underlying loss than a year earlier, because the £25.3m underlying pre-tax loss wasn't as much as the £29m analysts had expected.
But a loss is still a loss, and indicative of the worsening trading environment Dixons faces both at home and in its overseas markets. Like-for-like sales fell 5 per cent across the group, led by an 8 per cent fall in its core UK and Ireland business. Despite this, the company remained positive, pointing to an improving trend throughout the half and a reduced divisional operating loss, £3.9m from £10.7m a year earlier, thanks to cost reductions.
Economic troubles in Greece and Italy meant widening losses in its international division, and even in its standalone Nordic business which, over the past few years, has delivered steady growth and offset difficulties elsewhere. International profits slipped £2.9m to £42.1m despite a 4 per cent increase in like-for-like sales, although this was blamed on higher markdowns as a result of competitor bankruptcies.
Broker Numis Securities expects full-year pre-tax profit of £85.3m and EPS of 1.6p (from £90.5m and 1.5p).
DIXONS RETAIL (DXNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 10p | MARKET VALUE: | £361m | |
| TOUCH: | 10-11p | 12-MONTH HIGH: | 27p | LOW: 9p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 18p* | NET DEBT: | 21% | |
| Half-year to 23 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 3.35 | -11.4 | -0.10 | nil |
| 2011 | 3.30 | 2.40 | 0.10 | nil |
| % change | -1 | - | - | - |
*Includes intangible assets of £1.08bn, or 30p a share | ||||
