This morning DSG International (aka Currys and Dixons, to stick-in-the muds like us) reported a 6% drop in overall sales for the 16 weeks to August 22 – much to the delight of City analysts, who were expecting something in the region of 11%. So although its quarterly figures weren’t pretty – particularly in the UK, where like-for-like sales were down 14% - they were at least better than expected. And with DSG shareholders set to vote today on a controversial new pay deal, which would see DSG’s top brass swap salary for share options, the timing couldn’t be better...
In truth, there was plenty of bad news in today’s results. UK sales were well down – fewer of us have been splashing out on white goods, as you’d expect, but there was also a big drop in business sales at computer retailer PC World (while the ongoing store refurbishments didn’t help either). Eastern Europe has also been a problem: DSG has just agreed to sell its Polish arm for a measly €1, not long after agreeing to offload its Hungarian business for the same nominal sum. It’s also had to close under-performing businesses in Sweden and Finland lately.
That said, it was actually the Nordic countries that saved DSG’s bacon this time around: sales in the region jumped 9% on a like-for like basis. The ecommerce division is also doing pretty well, posting a 6% rise. DSG boss John Drewett, who was poached from Tesco in 2007, admitted times were still pretty tough in his market but said it had been ‘an encouraging start to the year’, insisting DSG was making ‘good progress’ on its turnaround plan. And importantly, investors seem to agree, judging by the 8% bounce in its share price this morning.
This presumably bodes well for today’s vote on his new ‘salary sacrifice’ plan, which would involve 90 top execs (including Browett himself) giving up as much as 25% of their salary in exchange for share options. The scheme has come under fire because it’s not directly linked to performance – despite DSG promising last year not to do this. But Browett has a pretty good case: as well as saving the company cash in the short term, it’s also a way of incentivising a new management team who have little chance of hitting their previous share option targets any time soon. He’s also consulted investors at every stage, rather than just springing it on them at the last minute. We suspect that if it wasn’t for the recent rows about executive pay, the plan would have caused barely a ripple...
In today's bulletin:
Do you trust your boss?
Currys owner cheers City - with 14% fall in UK sales
Sony to bring 3D TV into our front rooms
Key shareholders fall out again over Indie
Editor's blog: A summer of MPV agony