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Sales slide continues at DSGi reseller business

Microscope contributor

Life's only certainties are death and taxes but it would seem that the perennial sales decline in DSGi's reseller operations should also join that list.

The retail giant this morning released a trading update for the second half of its fiscal 2010 ended 1 May with group sales up 8% and more modestly at 4% for the entire year.

John Browett, DSGi chief executive, said the businesses moved forward "against a challenging backdrop".

"Whilst we remain cautious about the consumer environment for 2010, we are looking forward to the opportunities offered by this year's World Cup," he added.

However, with H2 sales up 6% in the UK retail operation - Currys,  Currys Digital and Dixons Travel - it was the 11% drop in the already beleaguered Computing division which comprises PC World, The Tech Guys and its reseller brands that will be of more concern.

The Nordics and its e-commerce businesses - Dixons.co.uk and Pixmania - pushed up revenues by 33% and 12% respectively.

Gross margin were down 0.2% in the second half resulting in flat margins for the year, while underlying group profit before tax of £80m to £90m were "in line with market expectations", DSGi said.

Browett said the firm would continue with the Renewal and Transformation Plan and revealed it had already realised £50m of the previously announced £200m four-year cost cutting programme.

The other noteworthy development is the £360m Revolving Credit Facility which comes into effect on 15 August and runs for two years with an option to extend for a third if DSGi can raise at least £100m of additional finance by November 2011.

The company, which was hit hard by a string of reductions in credit insurance during the economic crisis, said this provides it with "flexibility", to fund its working capital requirements. 

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