Dixons says food mixers and tablets to drive Christmas sales
LONDON (Reuters) - Electric food mixers and big screen televisions will vie with laptop computers to be the stand-out sellers this Christmas, Dixons Retail , Europe's No. 2 electricals retailer, said on Tuesday.
"Everyone suddenly wants to become a chef, particularly baking," Chief Executive Seb James told reporters, noting the huge popularity of 'The Great British Bake Off' television show in driving home-baking and demand for food mixers.
"Whilst three years ago it would have been inconceivable to buy one of these as a Christmas present they've now become one of the most popular things to give," he said.
James, speaking after Dixons beat forecasts with a more than doubling in first half profit, said the firm expected to sell 1 million tablet computers this Christmas and was also seeing robust demand for headphones and small speakers.
British retailers are expected to enjoy their best growth in Christmas sales this season since the financial crisis, according to market research specialist Verdict, which forecast consumers would spend at least 2 billion pounds ($3.3 billion) more than in 2012.
But across Europe many store groups are still struggling as government efforts to bring down national debts reduce consumers' disposable incomes. Electrical retailers have been particularly exposed because they sell discretionary goods and face intense competition from supermarkets and internet players like Amazon and eBay .
In Britain, Dixons' biggest market, the retailer has benefited from a tablets boom, as well as the demise of major rival Comet in 2012 and problems at Jessops and HMV. It has also been cutting costs, revamping stores and seeking to improve products, prices and customer service.
Shares in Dixons, which trails Metro's Media-Saturn by annual sales, have increased 81 percent so far this year as it has increasingly focused on markets where it has a leading "multi-channel" position with a combined stores and internet business.
Over the last six months the firm has offloaded the loss-making e-commerce business PIXmania and operations in Turkey and partially exited Italy.
Dixons' shares were down 3 percent at 49.8 pence at 1012 GMT, valuing the group at 1.84 billion pounds, after it cautioned that the second half would be tougher than the first.
"The macro economy is still quiet, particularly for discretionary spend like this," said James, pointing out the firm was also up against much tougher comparative numbers.
Dixons, home to the Currys and PC World chains in Britain, Elkjop in Nordic countries and Kotsovolos in Greece, made an underlying pretax profit of 30.2 million pounds in the six months to October 31.
That was well ahead of analyst forecasts of 20-26 million pounds and 14 million pounds made in the previous year.
Total underlying group sales were 3.43 billion pounds, up 5 percent, while sales at stores open over a year rose 6 percent.
Like-for-like sales in the UK & Ireland increased 9 percent and were up 3 percent in northern Europe. But they fell 14 percent in Greece, a market James has committed to stay in.
Investec analyst Kate Calvert raised her 2013-14 pretax profit forecast by 3 percent to 164.4 million pounds.
She reckons Dixons is capable of delivering double digit growth per annum for the forecastable future.
"This will come from self-help - reducing the UK portfolio from just over 500 stores to 380-400 - exchange of best practise, developing closer supplier relationships and investing efficiencies into price and service to differentiate itself from others," she said. ($1 = 0.6136 British pounds)
(Reporting by James Davey; editing by Neil Maidment and Jane Merriman)
