Dixons pays pounds 58m to offload French online retailer
(Guardian (UK) Via Acquire Media NewsEdge) Dixons Retail is paying a German group euros 69m (pounds 58m) to take the loss-making online retailer Pixmania off its hands.
Shares in the electrical retailer rose 7% after it said France's Pixmania, whose sales fell 32% in the first quarter, would become part of Germany's Mutares. The City also welcomed an upbeat first-quarter trading update, in which Dixons said there had been an encouraging start to the year.
Chief executive Sebastian James said the German industrial group had a track record of turning businesses around, and that the cash Dixons was paying would be ringfenced to be invested in Pixmania.
He said the business did not fit into Dixons' plans of "a fully integrated multi
channel proposition where we are the market leader", and that it needed "a different kind of entrepreneurial vigour".
The deal is expected to complete after consultation with Pixmania work councils. The retailer said closing the business would have been more costly at more than euros 90m plus losses for a "year or two" while talks over closure took place.
The retailer revealed plans to sell another loss-making business - its Electro World operations in Turkey - to Bimeks, a Turkish electricals chain, for pounds 2m.
The group, which includes Currys and PC World, gave a first-quarter update showing sales up 4% in the three months to 31 July. Like-for-like sales were up 2%. Gross margins were down 0.4%, which Dixons said was owing to its sales mix and a drive for better value for customers.
"There are some signs of economic recovery, but we're pretty cautious in all of our markets," said James.
In the UK and Ireland total sales rose 3% while like-for-likes were up 6%. James said he was pleased with that because it was achieved against some "tough comparables" a year earlier, when the Olympics boosted sales, and despite the hot weather this summer, which he said kept people away from retail parks.
In northern Europe total sales rose 12% while like-for-likes increased by 5%, and in southern Europe total sales were flat while like-for-like sales fell 12%.
James said its southern European business was hit by colder weather in Greece and Italy, which dented sales of air conditioning units. Overall Dixons' Greek business was in good shape, despite the "very challenging" economic environment.
"Dixons shares are off to a flying start following an update which confirms further growth and, of equal importance, consolidation," said Richard Hunter, head of equities at Hargreaves Lansdown.
Rise in like-for-like sales at Dixons in the UK and Ireland. However, the chief executive said he remained cautious over all its markets
(c) 2013 Guardian Newspapers Limited.
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