DSG issues new alert on profits as demand falls

DSG International, the owner of Currys, PC World and Dixons.com, issued its second profits warning this year, saying trading conditions across all its markets remain challenging.

New chief executive John Browett promised investors he will reveal his new strategy for the group in mid-May, but said retailing was hard, particularly in the UK, Italy and Spain.

DSG said it had seen a 0.8% fall in gross margins and reined in analysts' forecasts saying profits for the year will now be in the £200 million to £220 million rang, well below forecasts which ranged from £214 million to £230 million. The shares fell 5p to 60p.

"Whilst like-for-like sales patterns are broadly in line with those we reported over the Christmas period, it is clear that customers have become increasingly promotion and deal-driven," Browett said.

At Currys special deals have helped to maintain demand for flat-screen televisions, laptops and large kitchen appliances. But outside promotion periods demand has been lower than expected. In the 25 weeks to 5 April, Currys sales were totally flat.

For PC World sales have continued to be disappointing despite reasonable demand for laptops and games consoles. Sales of software and peripherals fell. For the 25 weeks PC World's like-for-like sales dropped by 9%.