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DSGi adds to doom and gloom in trading update

Paul Kunert

DSGi is continuing to focus on cutting costs, better managing inventory levels, improving liquidity and raising margins, following a trading update this morning that highlighted tough market conditions.

Like for like sales were down 7% for the six months to 18 October 2008 and gross margins across the group were down 0.7%.

"The trading environment continues to be tough. We are very focused on managing through this by reducing costs and improving our cash position," said John Browett, chief executive at DSGi Plc.

Sales of electrical gear and computing equipment in the UK and Ireland fell on a like for like basis 7% and 11% respectively. Sales in southern Europe dropped 10%. E-commerce sales grew 9%.

The company said consumer confidence had deteriorated in recent weeks across Europe, and as a result the group is "further focusing on cash, cutting costs, improving margins and reducing stock."

It is also cutting capital expenditure by approximately £30m this year with reductions focused on lower returning areas of lesser priority.

Before peak season this Christmas, DSGi will open 7 Currys and Currys digital new format stores and will 40 reformatted PC World stores will open by the middle of next month.

This has been a year of change at DSGi after it axed a staff in May including long serving directors David Gould and Richard Harrison in response to declining hardware average sales prices.

It appointed Martin Dorchester as interim chief operations officer, a newly created role, and tasked him with improving efficiencies in logistics, warehousing, trading operations, buying and IS.

More recently DSGiput 60 staff on notice of redundancy and as exclusively revealed by Microscope weeks ago these included a number of directors and middle managers.

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