Tonight:
5°c
DSG sparks amid craze for gadgets
Simon English, Evening Standard18 Oct 2007
Public demand for the latest electronic gadgets shows no sign of slowing, despite the rising cost of credit and growing talk of a housing crash.
DSG, the retailer behind Currys.digital, Dixons and PC World, said in a half-year trading statement today that like-for-like sales are up 6% in the UK and 5% across the whole group - beating expectations.
But the outlook for Christmas is cloudy and with profit forecasts likely to slip, DSG shares fell 5p to 131p.
Finance director Kevin O'Byrne said appetite for flat-panel TVs, laptop computers and games consoles remains strong.
"We are seeing a pretty ebullient and robust performance across our biggest markets," he said. The Nordic division, DSG's second-biggest market, is also strong, with only Italy causing trouble. Italian sales tumbled 8%.
O'Byrne believes retailers can shrug off minor economic downturns as long as the goods they are selling are interesting enough.
"We have always said that if there is an exciting product cycle people spend money. We are cautiously optimistic about Christmas," he added.
DSG is awaiting the arrival of new chief executive John Browett from Tesco, where he is being made to work his notice. Browett starts on 5 December, replacing John Clare, who stepped down last month after 13 years at the helm.
City analysts are nervous about the pace at which DSG's margins are being eroded, a factor O'Byrne acknowledged needs to be addressed. In the half-year to the end of October, margins slipped 0.6%.
Nick Bubb at Pali International reckons DSG has a break-up value of 195p, though a bid seems unlikely just now.
There was also reasonably good news from DSG's fellow High Street name Mothercare.
UK like-for-like sales, which strip out the effect of new store openings, rose 2.5% in the half-year to 13 October. Mothercare bought the Early Learning Centre for £85 million last May and says the integration of the two business is "on track".
But chief executive Ben Gordon was more cautious about Christmas: "It is really difficult to say how it will be. We have done everything we think we need to and the stores are looking good."
