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DSG International, owner of Currys and PC World, today announced it is scrapping its dividend after plunging into the red during the first six months of the year and warned that trading remained "tough and volatile".
The company blamed weak trading across the UK, Ireland, Spain, Central Europe and Italy for a £29.8 million pre-tax loss for the six months to October 18, compared to a £52.5 million profit last year.
As a consequence, DSG said it will not pay a dividend in the current financial year to "preserve liquidity" and to deliver on its "Renewal and Transformation" plan.
The company has already cut £75 million worth of costs from the business and aims to reduce capital expenditure by between £30 million and £160 million in this financial year.
The company, which has £149.5 million worth of debt, said today it is compliant with its financial covenants at the first half point, and had £300 million in undrawn bank facilities.
This week, DSG became one of the retailers to pass on the 2.5 per cent cut in VAT, announced in the Pre-Budget Report, to its customers.
Sales over the first six months of the year rose 3 per cent to £3.4 billion however on a like-for-like basis, which strips out trade from new stores opened during the period, revenue fell by 7 per cent.
In the UK, demand for computing was heavily impacted, with sales down 11 per cent while electrical trade fell by 7 per cent. In Southern Europe, sales declined by 8 per cent while the Nordic region reported a 6 per cent fall in revenues.
However, ecommerce continued to thrive for DSG, with trade up 9 per cent over the first six months of the year.
DSG said today: "The trading environment remains tough and volatile. The group is prepared for a recessionary environment and is consequently focused on cash generation."
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PC World staff are NOT paid on commission. It was scrapped & the "one team bank" brought in so that the stores worked together to pay for their christmas meal. Now money has stopped coming in from that as well because DSG wants to save. So the "extended warranty" doesn't pay commission
Ali, Cambridge,
An option to roll-back to XP or a dual boot config as standard across the organisation would change their fortunes in weeks.
dave hall, Stafford, UK
I agree, vista, due to bad reviews has put a lot of people of buying computers.offer XP. DSG & Comet have vast product ranges you can view & touch before buying. People do this then go & buy online. would they buy these items, if they could only view on line i dont think so - so give support
Dave , birmingham,
It's that word again 'PLUNGING' or should it be 'PLUMMETING' ??
Al, Willesden,
I think a big contributer to the downturn of computer sales is Vista. All the previouse versions of windows have been smooth and noticeable improvements, but Vista is not a smooth trasition and I personally find it slow complicated and lacking.
Tony, Leigh-on-Sea, Essex
Several "flawed" opinions, when you consider the impact pending on unemployment and subsequent pressure on other highstreet & out of town retailers as a result of consumer confidence currently. All multi-national retailers suffer from varying service levels, Imagine the impact of DSG falling over.
Bob Newton, Belfast, NI
I am not surprised. How can anyone afford to pay their prices in this climate? Many people are turning to places like overclockers/amazon/play on the internet.
Andrew Bell, Reading , Berkshire
Ridiculous comments again. Read the full press release and get the facts. Sales are actually up. The reason for the loss is due to a massive restructure, the cost of new stores, revamping old stores and re-training staff, on top of the hardest trading conditions for years. Judge in 18 months.
Andy, Watford, UK
Not surprised about the profits! On the last four occasions I have purchased from PC World, the goods were incorrectly priced and they were forced to sell at the much lower marked price indicated on the shelf. Three years ago I enquired about mains networking and the staff looked at me clueless.
Martin, York, UK
In our town their main competitor is Comet and the difference in service and product knowledge between the two is vast. Out of choice it's Comet every time!
David, Huddersfield,
I agree. The best thing is when they sell you an annual sevice to which they just put your restore disc in and charge you 30 quid. Whata joke. Go to your local shop and get a better service!!
cristian, nottingham,
Perhaps if the staff recommended products to the customer based on what is suitable or what they require rather than what they need to shift that week to earn commission then they would not be in this situation.
SIMON R, london,
I couldn't agree with the other comments more. Their service levels are appaling and their prices no better and usually worse than other sources. PC World is just plain expensive, I avoid shopping there and it seems I'm not alone.
Ian, Southampton,
I would echo the semtiments here. Poorly trained staff with little knowledge of the products. The aircraft hangar style shops have an believeably large enegery consumption and so it would help reduce global warming if all there business was to be done via ecommerce in future. Another £300m to go!
Stewart, Swansea,
Perphaps its the poorly trained staff that ignore custumers until forced to serve you. PC world is an absolute joke.
Mark James, London, England
I have always had bad experiences with PC World and Currys so will be overjoyed to see them go to the wall.
Chris, Ashford, Middx, England
DSG has felt the force of on-line competition, for example from Amazon. No one needs those monster warehouse-style electronics shops any more, they simply hike the price of products without providing any obvious improvement in service from their poorly trained staff. Sorry, but that's 21st C life.
Colin, shrewsbury,
Would you like to take out an extended warranty with that?
David, Norwich, England
the banks should withdraw overdraft facilities from this curry's just like they have from small businesses.
DSG is a flawed buisness and the banks are going to lose a lot of money if they let this joke shop continue
rupert oppeinheimer, london, england