Recession chill sends DSG sales diving 7%

DSG International, the Currys, PC World and Dixons group, today reported a sales plunge of 7% on a like-for-like basis, confirming it will not be making a profit in the first half of the year.

"Consumer confidence has significantly deteriorated particularly in more discretionary areas," said DSG chief executive John Browett.

"The trading environment continues to be tough. The market in large-screen TVs has come off. People can carry on with their old TVs, and that is what they doing.

"We are also seeing a slowing in the laptop market. It is still growing strongly but not quite as well.

"We have already seen the slowdown in white goods but this has not got any worse. We are now firmly in the replacement cycle where people have to come and get their new washing machine when the old one gives up."

DSG has been a basket case on the High Street for some time, crashing out of the FTSE 100 to the point where its shares now value the group at less than £500 million.

It is being caught in a perfect storm of collapsing consumer confidence, increased competition, the arrival of the giant Best Buy to the UK, and the crash in the value of sterling which will push up the price of imported electricals.

DSG had previously reported a 7% fall in trading in the summer, and the last eight weeks have also shown a decline of 7%

"We have been preparing for a recession all year," said Browett.

"We knew the road would be rocky and it is a very tough environment. We saw good trading in early September but that went away after the collapse of Lehman, and consumers began to start worrying whether their bank deposits were safe.

"We have seen waves of lack of confidence but we have not seen the end of the world. People are still shopping."

Detailed sales figures show DSG's Dixons online business to be the single star performer.

Making up 15% of DSG sales, Dixons and web-based sales in general were up 9%, growing faster than the 6% previously reported.

UK electrical sales were down 7% while UK computing sales fell 11%.

Its Scandinavian business has worsened, down 6%, while its Italian and southern European operations showed some improvement but are still down 10% year on year.

New pain for Ashley as Sports World puts in worst-ever show

The bad news continues to pile up for cheap-sportswear tycoon Mike Ashley.

He has had huge losses on stock-market punts on banks, and has been vilified on Tyneside where he wanted to be a hero by buying Newcastle United and now sales at his Sports World chain are the worst he has seen.

Sports Direct, parent company of his group which also includes Lillywhites on Piccadilly and sportswear brands such as Lonsdale and Dunlop, said: "Trading conditions continued to be the hardest the group has faced in its history."

Analysts, who have been used to slashing Sports Direct's profit forecasts and have moaned at the paucity of trading information the group gives out, were again refused figures on like-for-like trading in the half-year to the end of this month.

However, the company said it expects to hit an underlying profit of £135 million before exceptional writedowns, the effect on imported clothes of the fall in the pound, interest payments and tax. That is down to where most analysts have brought their forecasts.

The figure does not allow for the £3.4 million the company recently paid for a 5% stake in equally troubled rival JJB, or holdings that have been built up in other companies such as Blacks Leisure.

Ashley owns 71% of Sports Direct, and took out almost £1 billion when it floated at 300p a share 18 months ago. The shares were today unchanged at 37¼p.