Dixons full-year results: What the analysts say

“Continuous UK market share gains after Comet’s bankruptcy and further progress made in reducing losses in Southern Europe and Pixmania. Underlying trends remained unchanged with strength in the UK and Northern Europe partly offset by weakness in Pixmania and Southern Europe. UK EBIT grew by 39% year-on-year to £113m, around 4% above our bullish estimate while Southern Europe losses reduced by £7m as Italy traded better than expected. Pixmania remains problematic but we estimate that cost savings of around £15m will kick in in full-year 2013/14.” - Christodoulos Chaviaras, Barclays

“There is no incrementally positive news on potential disposals or reduction of losses at Pixmania or within Southern Europe and, whilst we are confident that “worst case” numbers for closure of these businesses are in the market, as buyers of the shares it is frustrating that news on this front is not forthcoming.” - Sanjay Vidyarthi, Espirito Santo

“Dixons has ended its year posting a strong set of results; but behind the market beating headline lies a more complicated story, with the group working adeptly to react to a period that has bought a variety of challenges across its European businesses.

“Dixons’ Northern European operations are making steady progress as the group asserts its leadership in the region, with LFLs up 12%. In contrast, Southern Europe has been more a case of damage control and stemming losses; unsurprisingly, consumer demand in the Italian and Greek electricals markets has been extremely weak and, despite a more aggressive approach towards restructuring the faltering PIXmania chain, closing 19 stores and exiting from non-profitable categories, it also remains a drain on overall sales and profits.

“Fortunately, though, the core UK & Ireland division continues to strengthen, with LFLs up 13% in the last quarter.

“However, against the background of a sluggish economy and a shift in spend towards price-focused online players, such graces are far from the only cause of Dixons’ success. For one, Dixons has been proactive in its efforts to capitalise on consumer’s shift online. Early and continual investment has borne a user-friendly website and, coupled with its large store portfolio supporting comprehensive fulfilment options, Dixons delivers a compelling multichannel offer. To further combat the pureplays, Dixons has undertaken initiatives to improve price perceptions, and while this is an on-going fight, it is reassuring Dixons that has acknowledged price as a fundamental for success in today’s climate.” - Liz Faulkner, Conlumino

“Dixons needs to take advantage of this position and continue its efficiency and restructuring strategies. Currys and PC World may dominate electronics retail on the high street right now, but parent company Dixons faces stiff competition from online rivals such as Amazon, and continues to have challenges in its European operations.” – Dan Coen, Zolfo Cooper

“Though underlying profit before tax is a tad better than expected at £95m, with the wretched Pixmania e-commerce business managing to only lose £31m, it would not be churlish to point that there are exceptional charges of £210m (mostly relating to the restructuring of Pixmania). Dixons call it ‘A Year of Significant Progress’, but overall pre-tax losses are only slightly improved, from £119m to £115m… But the market is looking ahead, not back, and is relying on a big reduction soon in the losses in Southern Europe and Pixmania and on continuing good progress in the core UK and Nordics operations. Dixons’ ebullient chief executive Seb James is in good form in the statement, talking about ‘our transition from survivor to winner’ and saying that “from Truro to Tromsø; every day we must find new ways to surprise, delight and improve the lives of our customers” and we look forward to seeing him in action at the analysts meeting.” – Nick Bubb, independent