The struggling owner of Currys and PC World is holding out for what it hopes will be a flood of post-Christmas spending unleashed once nervous consumers see discounts emerging on computers and electrical goods.

DSG International said yesterday that the post-Christmas surge would be more important this year because of the downturn. January spending has risen rapidly in recent years, and the company said that it was particularly reliant on the period.

The electrical goods and computer retailer has been battered this year by the housing downturn and the collapse in consumer confidence, losing 90 per cent of its stock market value.

John Browett, DSG’s chief executive, said: “The two weeks after Christmas is more important for us [than the run-up]. We expect that period to be reasonable because clearly people are deferring purchases.”

This January will be compared with a particularly strong post-Christmas period last year.

Mr Browett said: “Relative trade peak has gone from before to after Christmas, and it’s getting more extreme. That’s why it’s hard for me to give you clarity on how hard it’s going to be. Forecasting all that is a mug’s game.

“You set the business up [with] a reaonable stock and, frankly, you lock and load and away you go.”

DSG yesterday fell to its first half-year loss in 20 years and axed its interim dividend. Its underlying pre-tax loss for the six months to October 18 was £29.8 million, against a £53.4 million profit last year for the same period. Pre-tax losses deepen to £61 million once one-off items such as restructuring charges are accounted for.

Sales across the DSG group, formerly known as Dixons, slumped by 7 per cent when new stores are excluded. Total revenue rose by 3 per cent to £3.5 billion. Sales at PC World were particularly badly hit, with British computing sales plunging 11 per cent.

Mr Browett said that the company had adopted a bearish view on the economy since his arrival from Tesco in May. He said: “We’ve gone back and looked at all recent recessions, including 1929, and how people spend. And in all reasonable scenarios we will be fine. But it’s an unreasonable world.”

DSG said that it had taken a cautious approach to buying stock and played down concerns over its debt. At October 18 it had £300 million of headroom on its overdraft, which it believes will be enough for the peak Christmas period when retailers are typically most indebted.

The group said that performance in its troubled Italian business had “stabilised”, with sales almost flat in the past quarter in a declining market. The company is reviewing its European businesses and many analysts expect it to dispose of the Italian arm.

Spanish and Central European markets had been particularly hard hit by the global financial downturn, DSG said, and in Scandinavia it had faced deep-seated consumer pessimism.

Nicholas Cadbury, DSG’s finance director, said: “The Nordic consumer reacted very quickly to the banking crisis, with very fresh memories of the last crisis in the 1990s.”

DSG’s shares fell by 1½p.

However, Mr Browett was adamant that the turnaround of DSG was on course. He said: “UK electricals has been where the biggest challenge has been. We’re re-setting the business and grasping the nettles in order to set up the business for the long term.”

DSG is focusing on generating cash during the downturn and has cut capital expenditure by £30 million to £160 million. It insists that it will have enough cash to roll out a store refurbishment programme that will introduce a new Currys megastore format, which is being piloted in Birmingham, as well as continued re-fits of high street Currys Digital stores and PC World.

Running the rule

£29.8m DSG’s underlying pre-tax loss for six months to October 18

£30m Cut from DSG’s annual capital expenditure to £160 million

11% Like-for-like PC World sales decline

88% Fall in DSG share price since year-start

1,200 Shops operated by DSG in 28 countries

£600,000 Chief executive John Browett’s bonus for first year

0p Dividend this year at DSG

Source: Times archive

HRG buys Alba and Bush

Home Retail Group, owner of Argos, has bought the budget electronics brands Alba and Bush from their stricken owner, Alba, for £15.25 million (Catherine Boyle writes).

Alba sold the brands after “extremely challenging” market conditions worsened existing problems in the business. The electronics distributor will change its name to Harvard International under the terms of the deal with Home Retail. It plans to return £15.4 million of the proceeds to shareholders.

Alba's profits have been hit as consumer spending on electronics declines. It had a pre-tax loss of £1.2million in its half year to September 30. The distributor has suffered in recent years as more retailers try to save money by buying direct from manufacturers.

If Argos had not stepped in, Alba was planning to discontinue the Alba and Bush brands as part of a restructuring. Alba shares closed up 14p to 48p.

Home Retail said the two brands enjoyed “high awareness and purchase frequency with Argos customers”.

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