Smash hit

Asked if the poor results would hit the group's full year dividend, Mr O'Byrne said: "This is a board policy. The board will make a decision at the end of the year and communicate it then."

Lower demand for laptops and accessories in the pre-Christmas trading period helped drag down sales of computing goods at PC World in the UK, which fell 10 per cent on a like-for-like basis. Sales had risen 6 per cent in the year ago period. But there was good demand for games consoles, iPods and digital photo frames, DSG said.

The online businesses of Dixons.co.uk and FotoVista were the only divisions to record growth in the pre-Christmas trading, up 31 per cent, although down compared to last year's growth of 156 per cent.

On Wednesday, Tony Shiret, of Credit Suisse, reiterated his “underperform” recommendation on DSG, with a 95p price target, and added that “following the appointment of the new CEO we anticipate material UK store closures – possibly as many as 200 out of the 700 store base”.

Mr O'Byrne, who was fielding analyst questions in place of Mr Browett, who was attending a funeral, said DSG would take immediate actions to reduce its cost base, although he said it was too early to say whether or not that would include any UK store closures.

He said DSG would look to make cuts across temporary staff, advertising and distribution.The company will also review the book value of its struggling Italian business, where it runs the UniEuro chain of stores, once a new managing director is appointed at the end of the financial year.

He added: "John (Browett) is in the business about 20 working days now. I don't know John's plans at this stage."

Mr O’Byrne said poor trading over Christmas - which normally accounts for over half of annual profits - contributed around £30 million to the group’s profit downgrade.

Another £5 million was due to an expected loss on property transactions in the second half of the year, while a further £15 million was the company’s best estimate of the impact of weak trading over the rest of the financial year, he said.

Mr O'Byrne declined to give specific guidance for the 2008/2009 trading period, although he said the company was assuming negative like-for-like comparisons at PC World for the next financial year.

He said: "We're not expecting things to be hugely different."

He said earlier problems caused by an overhang of PCs pre-loaded with Microsoft's Vista operating system was now under control.

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers said: "Concerns for the health of the consumer going into 2008 have today being underlined, with one of Europe's leading electrical retailers announcing an effective 15 per cent drop in likely profits compared to last year. Profit margins remain pressured via a combination of increased promotional activity and consumers' growing addiction to sale prices.

"That being said, a good element of the problems at DSG may be company specific. The evident consumer trend to purchase electrical goods online leaves the group's store based strategy looking vulnerable and whilst management have developed an internet outlet - the one major bright spot across the group - the speed of development is questionable."

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive