DIXONS GROUP led the retreat in the FTSE 100 as the loss of the electrical retailer’s final dividend was compounded by the view that rival Kesa Electricals offers better value.

With Dixons trading without its 6.22p final pay-out, equivalent to 4 per cent of the share price, yesterday was always going to be a bad day for the shares. That weakness was compounded by the repetition by Credit Suisse First Boston of its bearish stance ahead of the retailer’s annual meeting update on September 7.

Nathan Cockrell, analyst, points out that Dixons faces tough comparatives against last year, when like-for-like sales were up 7 per cent, while recent updates from its quoted rivals — such as Kesa’s Comet, which reported an 8 per cent like-for-like retreat — have been poor.

Indeed, Mr Cockrell notes that Kesa’s shares have fallen 5 per cent since its late July statement, while Dixons have been flat. The Swiss broker suggests that continued high price deflation in personal computers is likely to have taken its toll at PC World, while a “very slow” white goods market — is sensitive to the housing market — is set to hurt Currys.

On that front, Mr Cockrell thinks Dixons’ second-half profit forecasts could prove vulnerable if current British consumer weakness continues, and notes that the company’s earnings guidance has not always been reliable.

With CSFB citing a preference for Kesa — which, drawing 80 per cent of its profits from outside of the UK, against Dixon’s 33 per cent, is less exposed to the British consumer — Dixons gave up 7p at 152p.

Elsewhere among retailers, Next faded 10p at £15.28 as JPMorgan downgraded the clothing chain from “equal weight” to “underweight”, with a reduced £14.80 target. The American broker cites a proprietary survey showing that high street rivals are being perceived as both cheaper and more fashionable than Next.

The wider market succumbed to weakness in the mining sector and the loss of dividends from a clutch of high-yielding stocks, leaving the FTSE 100 25.0 lower at 5275.2. Centrica, up 9¼p at 252¾p, enjoyed the best gain on murmurs of bid interest from Royal Dutch Shell, off 8p at £18.31, Gaz de France or Norsk Hydro, despite scepticism from analysts.

Sage eased 3½p at 230¾p as Merrill Lynch flagged concerns over next month’s launch by Microsoft of accountancy software for small businesses.

Wolseley rose 22p to £11.42 on an upgrade by Numis Securities and repeated buy advice by Teather & Greenwood, which says the building materials group’s recent 5 per cent underperformance is “perverse”.

• NEW YORK: The Dow Jones industrial average closed down 84.70 at 10,434.90 as oil prices hit a record high and data offered conflicting views on the US economy.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

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