DSG continues retailer woes

DSG, the company formerly known as Dixons, became the latest British retailer to report a drop in profits for the summer months today. But it wasn’t all down to the rotten weather – this time it was also Microsoft’s fault.

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Last Updated: 06 Nov 2012

DSG said it had struggled to sell computers carrying Microsoft’s new Vista operating system (particularly laptops), and had been forced to increase its promotional spend to get them out of the door. This cost it some £20m in profit, the company admitted.

Vista has been on sale since January, but has not proved as popular as the previous XP upgrade, despite its array of fancier bells and whistles. This is partly due to a change in the IT landscape – cheaper alternatives like open source software and internet-based applications and storage are challenging Microsoft’s traditional desktop model (and they’re less prone to crippling viruses, too).

DSG insisted all was not lost – it hopes to make up the shortfall during its key Christmas sales period, which tends to account for about half of its annual profits. However, this puts rather a lot of pressure on incoming chief executive John Browett, who is finally joining from Tesco.com on December 5. Browett, who was forced by Tesco to work his full notice period (leaving DSG rudderless since July) will have just three weeks to get the retailer purring – and given that DSG has now lost a quarter of its market value in five months, he faces an uphill task.

On the other hand, the great British customer does seem to be spending again. The Office for National Statistics said this morning that retail sales were up 0.6% last month, although it reckons this was partly due to heavy discounting by companies like DSG trying to shift their excess stock.

But the big winners of the last few weeks have been the shops selling beer, pies and crisps. England’s wholly-unexpected success at the Rugby World Cup is providing a massive boost to sales of party food, not to mention replica shirts and other rugby paraphernalia. But they need to enjoy it while they can – with England’s football team looking increasingly unlikely to qualify for the European Championships next year, it could be a while before this happens again…

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