Dixons Retail has issued a profit warning for the financial year, reducing its forecast to £85 million from predictions of £100 to £110 million made in mid January.
Citing reduced customer confidence across a range of markets, the retailer has laid out a four step plan to ensure it remains on track to deliver its Renewal and Transformation plan.
– A review of its Spanish operations, including a possible exit strategy.
– Reducing its annual expenditure to £150 million and focusing on projects that offer the highest returns.
– A focus on generating cash.
– Further cost reduction initiatives including addressing property loss.
Although it’s early days, it’s likely that the plans will result in a sell off of DSGI’s PC City assets in Spain. The ongoing store renovation scheme will now only focus on those stores that offer the best returns for shareholders, an implementation of “robust management of margins despite the challenging market conditions” and other ongoing cost saving measures.
“Consumer confidence across some of our markets is fragile and we expect it to continue to be so through much of 2011,” said Dixons Retail’s group chief executive, John Browett. “As a result we are setting out the steps we are taking to secure the delivery of the Renewal and Transformation Plan.”