Dixons' writedown disaster

Those challenges are particularly evident in the UK, where sales slipped 3 per cent on a like-for-like basis. That's despite successful promotions such as its World Cup 'cash for goals' initiative which boosted TV sales ahead of the soccer tournament and selection by Apple as launch partner for the iPad in April 2010. However, it proved a year of two very differing halves, with underlying sales down 7 per cent in the last six months of the year as consumer confidence waned, despite further progress on the store refresh initiative. In fact, 250 UK stores have now been refitted, but the absence of any mention of trading improvement at these stores is hardly encouraging.

Europe also offered a mix bag, with steady trading in its reliable Scandinavian business offset by weakness in Italy and Spain, where Dixons has decided to close its PC City operation, incurring £70.6m of writedowns in the process. The Kotsovolos business in Greece was also weak - Dixons said the market there had contracted by a quarter over the year, and has written off £53m of associated goodwill, taking total write-offs in the year to £252m.

It's all proved too much for finance director Nicolas Cadbury, who has decided to quit the group to join Premier Farnell. That's not good timing, given the likelihood of a wave of corporate activity across the struggling sub-sector. Kesa Electricals looks certain to sell struggling Comet, with Dixons touted as one of the 10 possible buyers so far identified - if it does, a challenging integration will need an experienced hand at the tiller, especially as concerns about the balance sheet persist. Not buying Comet could prove equally problematic, as it would mean that the likelihood of a reduction in industry capacity would fall.

Broker Seymour Pierce expects 2012 per-tax profits of £89.6m and EPS of 1.91p (2011: £85.3m/1.6p).

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