The high street is undergoing “seismic” change, the chief executive of Dixons warned, as the electricals chain and rival Home Retail Group emerged as Christmas winners. Both companies were helped by strong demand for tablet computers, and Home Retail Group lifted its profit forecast.
In the week that has seen Jessops, HMV and Blockbuster plunge into administration, Sebastian James, chief executive of Dixons, said he was “heartbroken to see all these great brands disappearing off of our high streets”.
If Dixons had not taken action to secure its survival, such as expanding online and revamping its store base, then it could have joined the list of failures. “I think if we had not provided what people want, we would have gone too.”
Mr James said he was “encouraged” by customers choosing to shop with Dixons after the collapse of rival Comet.
However, he did not expect the collapse of HMV to have much impact. Mr James said he had bought his first album – Exodus by Bob Marley and the Wailers – at HMV. “The problem there is I didn’t buy my last album there. I bought it on iTunes. That is a market that has literally evaporated into the ether.”
Demand for tablet computers pushed Dixons’ sales from stores open at least a year in the UK and Ireland up 8 per cent in the 12 weeks to January 5.
Overall group like-for-like sales rose 3 per cent, held back by a 25 per cent decline in sales at Pixmania, its online business in southern Europe.
Mr James estimated that Dixons sold between 1m and 2m tablets over the period, with five tablets sold every second in the week before Christmas.
Demand for tablets also helped Home Retail Group, the owner of Argos and Homebase, to increase its profit forecast, sending its shares up 16 per cent and wrong-footing hedge funds that had been shorting the stock.
The retailer, which has been battling competition from online retailers and the supermarkets, said sales from Argos stores open at least a year rose 2.7 per cent in the 18 weeks to January 5.
Consequently, underlying pre-tax profit in the year to March 3 would be about £10m ahead of the consensus of analysts’ forecasts of £73m.
Terry Duddy, chief executive of Home Retail Group, said he had seen no “discernible” impact from the collapse of Comet, and he did not expect to benefit from the failure of HMV. However, Argos was looking to expand its photography business.
“We are sorry to see the demise of these businesses,” he said. “We are not sitting here pleased about the overall circumstances. But its about businesses which are strong financially, and have the ability to adapt to how customers are changing, which we are.”
The holiday season was also not so kind to Mothercare. It reported a 5.9 per cent fall in UK like-for-like sales year-on-year in the 13 weeks to January 12.
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