New look DSG delivers

Credit must go to chief executive John Browett for delivering on his plan to revive the once-shabby estate and help the Currys and PC World owner shake-off its reputation for shoddy customer service. Some 200 stores have now been reformatted so, while UK and Ireland like-for-like sales fell 3 per cent year-on-year, they actually climbed 3 per cent in the second half thanks to improvements to ranges and better-trained staff. DSG said two-thirds of its store portfolio by sales will have been transformed by October, which is likely to deliver further financial uplift. Sales in refurbished stores grew 3 per cent, while the gross margin is 20 per cent higher than older sites and 50 per cent higher in the megastores, of which a further 21 will be opened this year taking the total to 33.

Of course, there's more to the programme than a cosmetic overhaul. A simplification of the back office and logistic operations helped DSG cut £50m of costs this year and left it on track to deliver its £200m four year savings target. And those back office improvements have been key to delivering better customer service, improving product availability and offering next day delivery in three hour time slots. In fact, many of the improvements are being borrowed from its successful Nordic business, Elkjop, which managed a 13 per cent increase in annual like-for-like sales, and even its Southern European businesses appear to be recovering, with operating losses reduced from £23.7m to £8.3m. .

Broker Arden Partners expects underlying pre-tax profits of £130m for 2011, giving EPS of 2.3p (2010: £90.5m/1.5p).

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