Dixons tipped for continued boost

PC WorldThe owner of PC World and Currys is set continue its sales revival on Thursday as it benefits from its outperformance against struggling rivals.

Dixons Retail Group (LSE: DXNS) has emerged as one of the big winners in its sector, helped by the high-profile difficulties of Comet, Argos and BestBuy.

When it last updated the market, it said underlying operating profits across UK & Ireland rose 15% to £78.8 million in the year to April 28, despite a 4% sales decline. Shares have increased by two-thirds since the start of 2012 after sales turned around in the final quarter, with an 8% hike, boosted by strong sales of iPads and Kindle devices and the digital TV switchover in the south.

Numis analyst Matthew Taylor expects this positive trend to continue for the group's first quarter, with small gains throughout the year. Dixons has outperformed rivals with the help of strong online trading, as well as demand for click-and-collect and its new Knowhow service, which offers expertise to help customers install new technology.

Meanwhile, Sports Direct International will turn the screw on its ailing rival JJB Sports when it provides another stellar update, potentially boosted by the Olympics. The group, which has nearly 400 stores and owns brands including Slazenger, Donnay and Karrimor, is thought to have grabbed a bigger share of its market with the help of an aggressive promotional campaign.

Numis analyst Andrew Wade expects the group on Wednesday to report that sales growth for the three months to the end of July increased from the 16% in the previous quarter, although margins will be hit.

And he will be looking for an update on the Olympics as Sports Direct stocks an array of Team GB sportswear such as football and basketball tops, including official pieces of blue and white kit emblazoned with a Union Jack designed by Stella McCartney, which are expected to have sold well.

Separately, budget hotel chain Travelodge will be hoping to secure its future on Tuesday when landlords are asked to back a vital rescue deal. Creditors - including a raft of landlords across the UK - will vote on a plan that will see rent payments slashed across more than 100 hotels.

The group, which operates more than 500 hotels across the UK, Ireland and Spain and employs more than 6,000 staff, is proposing a plan to offload 49 hotels to other operators, while the landlords of a further 109 are being asked to accept a 25% cut in rent. The remaining 347 will be unaffected.

The company voluntary arrangement (CVA) is designed to allow Travelodge to exit poorer performing leases, while also free itself of a crippling debt burden. But the CVA has to be voted through by 75% of creditors.

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