Currys and PC World owner DSG International reported a sharp downturn in sales at both chains and in its Continental European arms today as consumer confidence slumps.

Shares in DSG, which were 156p a year ago, today fell 1¼p to 51½p.

“It's probably the most difficult trading environment we have seen almost within living memory, certainly since the last big downturn in the early 1990s,” said chief executive John Bowkett who was parachuted into the ailing electricals business from Tesco just less than a year ago.

He remains optimistic about his “renewal and transformation” plan which he launched last May.

“The initiatives we are making are working quite well — whether it's the new megastores in the Nordic countries or the new format PC Worlds in this country ... We are working intensely to get the business fixed for when the market turns up again.”

In the 16 weeks to the August Bank Holiday weekend like-for-like sales at Currys fell by 7%, those at PC World fell by 12% while online sales at Dixons.com and Pixmania rose by 6%. Overseas, Nordic sales were down 4%, Southern Europe fell 12% while Central Europe was flat.

Bowkett said PC World's performance was not as bad as it first appeared. “We had a major overhang of laptops from last year and more recently have been able to move from managing the business for clearance to managing if for profit. So while sales are down, margins are up and the overall profit is stable.”

Five of the company's stores have been refurbished. Another 25 stores are ear-marked for refurbishment before the peak selling period in the run-up to Christmas.

Bowkett said: “The laptop market is going very well but now everybody is selling them including the supermarkets so it's very competitive.”

At Currys and Currys.digital the best-sellers remain TVs as people gear up for digital and high-definition switchovers and games consoles and software.

Bowkett said the impact of the credit crunch on consumers was having different effects across the various countries in which the group operates. “We are being very very cautious about consumer demand. In Southern Europe we are seeing real increases in unemployment and economies moving into genuine recession. In the Nordic countries and other markets like the UK it still feels more like a crisis of confidence which is preventing people spending.” To counter this Bowkett announced today that he wants another £25 million of cost savings on top of the £50 million he has already achieved.

DSG will open its first UK megastore under the Currys label in Birmingham this year. At 50,000 square feet it will be an electrical hypermarket with up to 15,000 lines compared to 4,000 in a High Street store.

Consumer confidence slumps

Fionnuala Earley, Nationwide's chief economist, said: “Economic uncertainty continues to affect sentiment around spending and employment. It seems consumers are beginning to take a more realistic view of the future and are factoring in the possibility of tougher times ahead.” Of the 1000 polled, 65% said the economic situation worsened in August, up from 61% in July.