In a rash of retail results out this morning, perhaps the most (pleasantly) surprising come from DSG International, the group that owns Dixons, Currys and PC World. There was a time when DSG looked like a basket case, with internet retailers set to devour its market share. But under the leadership of ex-Tesco man John Browett, it appears to have bounced back with a vengeance: like-for-like sales soared 8% in the 12 weeks to January 9, smashing the City’s expectations of a measly 3% hike. Apparently that equates to selling a TV and a computer every 2 seconds throughout the Christmas period. Perhaps UK shoppers were working on the basis that they won’t be able to afford to go out much this year?
It’s a pretty impressive showing from DSG: overall group sales were up 11%, while trading was ‘ahead of expectations in all markets’. Analysts were expecting a strong showing in the Nordics, and DSG certainly delivered on that – like-for-likes were up a hefty 18%. But it also enjoyed a ‘record-breaking’ festive period in the UK – not just for TVs and computers (helped, apparently, by the success and popularity of Windows 7), but also in white goods. Its new format stores did particularly well: the out-of-town Megastores all racked up sales of over £1m in the first week of the sale (and judging by the scrum in MT’s local Currys on New Year’s Eve, we’re not surprised).
Browett has been focusing on cost cuts, as you’d expect: DSG is apparently on track to deliver about £50m in savings this year, with another £150m to come. But as these figures show, he’s also been investing selectively: as part of its euphemistically named ‘Renewal and Transformation’ plan (which he describes as ‘self-help’), many of its existing stores have been refurbished to make them a little less poky, while the new Megastore format is also clearly paying dividends.
Not content with all this, Browett has also been taking steps to address another potential problem: he’s started a consultation period with its defined benefit pension scheme members, with the aim of closing the scheme to future accruals (though they’ll get to keep their old ones). So that should shore up the finances too.
In fact, just about our only gripe with Browett is that he refused to give much of a steer on DSG’s prospects for 2010 – he said he didn’t know whether the group would be able to maintain this kind of growth, because it depended on various imponderables like government policy (though he seems to be leaning towards a Goldilocks scenario – not too hot, but not too cold either). Admirably honest, but it doesn’t help our efforts to bring this article to a neat and tidy conclusion.
In today's bulletin:
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Waterstone's boss out in the cold as sales slump again
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