Confidence boost

25 June 2003

The UK retailer’s results were only slightly positive. But that was enough to sting those who have been betting on yet more bad news. Now that the dividend has been jacked up and the stock yields 6%, shortsellers must be running for cover.

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Dixons said that sales in the year ended May 3 2003 rose by 18% to £5.8bn. Likeforlike sales increased by 1%. They were also up by 1% in the UK retail sector, although they declined by 1% at the Dixons UK chain. That was due to slower sales of audio products, games and communications.

UK gross margins declined by 90 basis points in the period. The group says this was increased on most products, but suffered from a sharp margin decline in mobile phones, a lower mix of coverplan contracts and reduced credit commission income.

UK retail operating profit declined by 5% to £240m. That was caused by a weaker contribution from The Link – following reduced subsidies from mobile phone operators – and by slower trading at Curry's and Dixons.

Dixons said it would jack up the dividend to 6.7p, an increase of 10%.

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