DSG warns of further tough times ahead

DSG chief executive John Browett said current internal forecasts at the firm assume there will be no upturn in the UK economy until the second half of 2010.

“The difficult economic backdrop across Europe and subsequent impact on consumer spending, particularly on discretionary products, has been well publicised,” he said. “The group expects these conditions to continue throughout the coming year in many of its markets.”

DSG reported a £140.4m pre-tax loss for the year to 2 May, down from the £184.1m loss it racked up last year after writing off over £300m from its Italian business. Total sales fell one per cent to £8.36bn, while the company’s net debt at the end of the period stood at £477.5m.

In April, DSG completed a £311m fundraising and renegotiated its banking loan facilities to shore up its balance sheet and fund a programme of store upgrades.

The firm has suffered during the downturn as the number of consumers willing to buy expensive electrical goods has dwindled.

UK and Ireland like-for-like sales fell 10 per cent over the past year in DSG’s electricals business, which includes the Currys and Dixons brands. Performance at the computing division, mainly PC World, was even worse, with like-for-like sales, down 13 per cent.

Browett added that DSG had taken wide ranging actions to restructure the business. The firm reduced costs by £95m over the past year and is targeting further savings of £200m over the next four years.