Struggling electrical goods retailer Dixons, now known as DSG, insisted it was well-prepared for the crunch Christmas trading period - as it reported a continued decline in domestic sales and warned that there were few signs of a recovery in consumer sentiment.

As he reported a 2 per cent fall in same-store group sales at Dixons stores for the six months to November 12, John Clare, the chief executive, said: "Trading conditions in the UK remain difficult.

"There has been no further significant deterioration in our overall trading in the UK during the period, but equally, no clear indication yet of any recovery in our markets."

Mr Clare maintained that DSG is "well prepared [for Christmas], our ranges and deals are strong and we are fully focused on meeting the needs of our customers. I am confident that we will perform well relative to our competitors".

Mr Clare, who has been expanding DSG internationally to try to offset the firm's reliance on the British market, squared up against one of the most crucial periods of the trading year for retailers as underlying sales at Currys also declined in the six month period - down by 3 per cent.

The retailer has also been moving away from the traditional high street to lower-cost out-of-town superstore locations.

And, although Currys and Dixons outlets still feature prominently in town and City centres, a spokesman said 90 per cent of its retail space is now away from the high street.

But despite a counterbalancing improvement in DSG's international businesses - particularly in Greece, Italy and Ireland - group reported underlying sales today were down by 3 per cent.

DSG's line on its yuletide preparations comes as a suvey by accountancy firm Deloitte found that, for the first time in a decade, the British public is planning to spend less on gifts this year than it did in 2004.

Deloitte found that, on average, consumers are planning to spend £310 on presents this year, down from £319 last year. Conversely, the public intends to spend more cash on having a good time over the festive period.

To read today's story from The Times on the survey click here

Although today's trading figures from DSG see sales continue their downward trend, the retailer is sticking to its profits targets for the year, as it concentrates on cutting costs and improving margins.

Analysts reckon DSG will make pre-tax profits of about £310 million for the financial year to next April, down from £336.8 million last time.

With the white goods market "particularly weak in recent months", DSG appeared content that Currys was gaining market share, despite an underlying fall in sales of 2 per cent in the electrical goods division.

The group described sales in the core personal electronics markets for Dixons as "satisfactory".

But, once again, DSG's mobile phone chain Link Communications was a thorn in the retailer's side - with like-for-like sales down 28 per cent in the past six months.

DSG said the sales performance at the Link was "disappointing", but again maintained that managed were planning to push to improve sales during Christmas.

Underlying sales of computers at PC World, also part of DSG, were down by 8 per cent.

Shares in Dixons closed last night at 150.5p, valuing the retailer at just under £2.8 billion.

To see what happens to the shares today click here

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