Dixons first-half profits soar

The UK electrical retailer has posted figures that legitimise its share-price performance.

Dixons has continued to feel the benefits of the collapse of Comet in the last couple of years. The share price has increased by more than 400%, having been below 10p in January 2012, which goes some way to explain why the shares have performed so well.

The consensus was that they would be posting pre-tax profits in the region of £20-26 million, so today’s £30.2 million figure is very impressive, boosted by the background of increasing sales in the UK and Ireland by 9%.

Over the last year the company has managed to offload its loss-making exposure in both Turkey and Italy. Complementing this restructuring, the company is also in-line to cut costs by year-end by £45 million.

It is worth remembering that the sector Dixons is in is highly competitive in terms of online sales, while food retailers have progressively been using white goods and electronics as loss-leaders in order to entice shoppers into their premises. Both of these factors have been chipping away at Dixons’s market share.

For the last year and a half there has been a very strong trend line; assuming it remains intact, it could well be used as a guide to those looking to buy into the company.

Dixons chart

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