DSG International, the owner of Currys, may withdraw from France by closing its ailing PC City chain. Consultation on the closure or sale of the 11 stores is expected to last until July and analysts said that quitting France could cost DSG up to £40 million.

The French chain is expected to be £22 million in the red this year, and John Clare, the chief executive of DSG, said at the firm’s interim results in November that the level of losses was “unacceptable”. Shares in DSG have underperformed by 15 per cent since then, largely because of the problems in France and separate issues at the Italian chain UniEuro.

DSG said that it had struggled to get enough stores in France and had been frustrated by tough regulatory restrictions, including a limit on the number of sales to two a year. It is hoping to transfer sales to its Europewide e-commerce operation Pixmania, which is the largest online electricals store in France.

Analysts welcomed DSG’s likely exit from the French business after five difficult years, despite the firm’s optimistic announcement in 2005 that it wanted to open as many as 100 stores in France.

Aymeric Poulain, a Merrill Lynch analyst, said in a note: “Biting the bullet in France is the right move for DSG. The value case is starting to become more apparent, although sorting out Italy remains the key acid test for Mr Clare and his team.” An obvious buyer would be Kesa, the owner of Comet and the Darty chain in France, which is believed to be trading well. FNAC, the electricals chain owned by PPR, might also be interested in the stores.

DSG’s French experience underlines the challenges that it faces in expanding into international markets. The retailer operates Elkjøp in the Nordic countries, UniEuro in Italy, Kotsovolos in Greece, Electro World in Central Europe and PC City in Spain, Italy and Sweden. Aside from PC City in France, UniEuro is the most troublesome business, but DSG has also struggled to find a route into Asia and pulled out of America in the mid1990s.

Rod Whitehead, of Deutsche Bank, said: “The exit from France doesn’t mean an end to international expansion for DSG. Some countries have worked and some haven’t. Scandinavia has been a real success but France has been a problem since it was launched.”

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