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Dixons Retail sales fall accelerates

Dixons, home to the Currys and PC World chains in Britain, said group sales at stores open over a year fell 5% in the 12 weeks to 7 January

Dixons Retail, Europe’s second largest electrical goods retailer, said sales declines accelerated over the key Christmas period, though the firm maintained gross margins and claimed it outperformed competitors in Britain.

Dixons, home to the Currys and PC World chains in Britain, said group sales at stores open over a year fell 5% in the 12 weeks to 7 January.

That compares with analyst forecasts of a fall of 4-6% and a decrease of 3% in the second quarter.

Dixons, which also runs Elkjop in Nordic countries, UniEuro in Italy and Kotsovolos in Greece, said gross margins across the group were flat year on year.

The firm said the sale period after Christmas was distorted by the UK’s VAT sales tax rise last year.

Like-for-like sales in the two weeks to 14 January were up 2% and up 23% in the period from 4 to 14 January. The VAT rise was introduced on 4 Janaury 2011 and there was a sales surge in the preceding days as customers rushed to buy more expensive items before the increase. “Consumer confidence in many of our markets remains fragile and we will maintain a cautious approach to the outlook for the year ahead,” said chief executive John Browett.

European shoppers have been curbing spending as their disposable incomes are squeezed by rising prices, muted wages growth, government austerity measures and fears over the impact of the eurozone debt crisis.

Electrical goods chains such as Dixons and European number one MediaMarkt Saturn are facing extra pressure from cut-price competition from internet retailers and supermarkets.

In October US group Best Buy abandoned plans for a chain of European megastores, while Kesa Electricals in effect paid a bidder to take loss-making British chain Comet off its hands.

Shares in Dixons, which have lost 55% of their value over the last year, closed Monday at 9.7p, valuing the business at £350m.

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