Dixons hurt by mobile slump

January 9, 2002 Posted: 1147 GMT

LONDON (CNN) -- Dixons Group, the UK's largest electronics retailer, on Wednesday said Christmas sales fell 0.6 percent on weak demand for mobile phones.

The company also reported a 70-percent rise in half-year net income to £66.3 million ($95.5 million), due mainly to the sale of unprofitable Internet service provider Freeserve to France's Wanadoo for £1.65 billion in stock.

Dixon's said sales at stores open for at least 12 months, excluding mobile phones, were up 6 percent in Britain, while sales in Continental Europe rose 20 percent.

However, the company said weak sales of personal computers and mobile

phones -- which account for about 40 percent of turnover -- offset strong gains in entertainment products and kitchen appliances.

"It was a reasonable performance and it would have been good if it were not for mobile phones," said Ian Livingston, finance director of Dixons. "We think we might be seeing the first signs of recovery in the PC market. December was a reasonable month."

Livingston said he expected a steadier year for mobile phone sales in 2002.

"We have got back to a more sensible level but I think it will carry on being down until May. It remains a very big and important market."

Dixons' pretax profit ended November 10, before exceptional items and proceeds from the sale of Internet service provider Freeserve, actually slipped to £87.4 million from £90.8 million a year earlier.

The company's half-year results were within analysts expectations. Dixons shares fell 5.7 percent to 225.5 pence in midday London trading.

Meanwhile, German retail group Metro on Wednesday reported preliminary figures showing sales rose 5.5 percent in 2001 to 49.5 billion ($44.1 billion).

Metro said about 44 percent of last year's revenue came from foreign operations, up from 42 percent in 2002. Metro operates 2,250 outlets in 24 countries.

The company also it was sticking to its earnings per share forecast of 10 percent, but did not give a profit target. Metro shares were down 1.7 percent in early trading in Frankfurt.