DSG unveils 30pc profits plunge

Currys and PC World owner DSG International unveiled a 30 per cent plunge in profits today and warned it remained "very cautious" about consumer confidence.

The group posted underlying pre-tax profits of £205.3 million for the 53 weeks to May 3, down from £295.1 million for the previous year, but in line with market guidance.

Bosses at the group had already issued two profits warnings this year.

DSG - which has begun a three year turnaround plan to change its fortunes - said its UK computing division was worst hit, with like-for-like sales down 5 per cent and underlying operating profits nearly halving to £63.2 million after having to launch a raft of laptop promotions to shift stocks.

The group said it would be focusing on cost control and cashflow as it wrestled with the spending slowdown.

DSG said: "The economic backdrop continues to be difficult and the group remains very cautious about consumer confidence in many of the markets in which it operates."

Overall like-for-like sales were up 1 per cent during the year, helped by a 27 per cent rise in internet sales.

Total UK computing sales - which includes PC World and The TechGuys support venture - were down 1 per cent at £1.8 billion. The group cited increased laptop promotions and the weaker consumer environment, "particularly in the second half".

The story was better for its UK electricals division, which comprises Currys and high street chain Currys.digital. Like-for-like sales were up 3 per cent, with total sales 4 per cent ahead at £2.9 billion thanks to popular flat panel TV and digital products.

DSG said the division saw a strong start to the year, but that the second half deteriorated as the consumer environment worsened and increased promotional activity hit margins.

The group operates more than 700 stores in the UK - more than 80 per cent of which are Currys and Currys.digital - as well as more than 500 across Europe.

Total sales were up 8 per cent to £8.5 billion. Italy was its worst hit international operation, where like-for-like sales were down 11 per cent. The group is closing 43 stores in the country under a group-wide overhaul.

DSG's new chief executive John Browett unveiled his turnaround plan last month, promising the business would be "unrecognisable" when it was completed.

The plan includes the removal of 77 under-performing Currys.digital stores from the group's estate as their leases end over the next four to five years and £50 million of cost-cutting.

Mr Browett, who was brought in from Tesco at the end of last year, said he was working "very hard" on the turnaround.

"The Group is operating in a challenging environment," he added. "We have lots of opportunities to improve performance and build on the group's many inherent strengths as a leading specialist electrical retailer."

Shares opened 1 per cent lower today, but the stock regained its footing to rise nearly 4 per cent in early trade.