Thanks to the technology boom of the early 2000s, a number of specialist electronics companies saturated the market, making the sector one of the most challenging in retail. However, due to a number of high profile administrations including Comet, HMV and Jessops, the fight for consumers interested in purchasing electrical goods has become significantly less fierce.
This has clearly worked in favour of technology group Dixons Retail, which has posted a strong sales growth for the past twelve months of trading. Although business remains challenging in the southern European markets locked in the grip of the Eurozone crisis, conditions have markedly improved both in the UK and in Ireland and indicate a positive future for the group’s Currys and PC World chains.
In the year to April, like for like sales rose by 4 per cent when compared to the previous year’s annual trading results, meaning the group now expects underlying pre-tax profits to register at the top end of the £75 million – £85 million industry experts forecast.
This has largely been put down to a tremendous 350 per cent boost in tablet sales, while oven sales have also risen steeply thanks to shows such as the Great British Bake Off increasing the popularity of home baking.
Chief executive Sebastian James was clearly delighted to announce that, for the first time in five years, the group has ended in a net cash position. Last year, the annual results showed a net debt of £108 million – demonstrating the huge changes which have affected the electronics sector in only a twelve month period.
Mr James believes that the lower number of competitors has had a positive effect upon Dixons Retail’s subsidiary brands.
He says; “We saw the exit of a number of competitors and that has definitely been a contributor to us, especially in the last quarter.
“We had a goal of gaining our fair share of Comet business and I think we’ve done that.
“Above all, we are enjoying the feeling of a little wind in our sails and we want to make sure that, in spite of continued economic uncertainty, this carries on into next year and beyond.”
Dixons certainly has reason to be optimistic given the flying start to 2013 recorded in Currys and PC World stores. In the three months to the end of March, like for like sales rocketed by 13 per cent – a factor the retailer believes to be at least 50 per cent due to the closure of Comet.
Yet with both the Jessops and HMV brands set to make reappearances on the high street after very high profile buyouts, this could prove to be simply a reprieve from the difficulties the retailer suffered over the past five years. Dixons must hope that consumer confidence continues to grow, thus causing a retail boom many businesses have been praying for in the recession-hit years since 2008.
Do you think Dixons will continue to succeed when HMV and Jessops are once more very real threats to its market share, or will the revamp of these brands grab the attention of the group’s target consumers?
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