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Dixons bids adios to struggling Spanish business

Microscope contributor

Dixons Retail is to quit its Spanish operations after deciding to cut its losses and run.

The High Street giant revealed in a trading update last month that it was reviewing PC City Spain as part of four pronged turnaround plan to counter slowing consumer demand.

In a brief statement to the City today, Dixons confirmed that after exploring its options all 34 stores in Spain, the head office and online operations will be closed.

"This decision has been made due to continuing weak consumer environment and contiuing losses of the business, together with the Group's plans to focus on combined eletrical and computing stores," said Dixons in a statement.

The retail market kept IT and consumer electronics sales ticking over during the recession but public sector spending cuts and tax rises weakened confidence and impacted demand.

The economic woes on the Iberian peninsula are well documented with Portgual requesting an international bailout, and Spain's unstable economy hit by rising unemployment.

The development at Dixons will not help the job count, and a managament committee of PC City have started "appropriate actions for the compulsary redundancy scheme", to be submitted to the Spanish Labour Authority.

PC City Spain had been run by long-serving Dixons head Phil Birbeck until he returned to the UK at the start of last year to manage the group's flagging reseller businesses.

On top of exiting Spain, Dixons is aiming to reduce capex to £160m in fiscal 2012 and £150m beyond, focus on cost generation activities and create additional cost reduction measures.

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