Dixons jobs boost defies profit dip

Britain's biggest electricals retailer Dixons is attempting to draw a line under recent flat sales with the creation of up to 2,000 new jobs.

Full year pre-tax profits were down 5% at £279m, the group said.

Like-for-like sales, excluding new store openings, were up a mere 1%, following a "disappointing" Christmas period.

But in an upbeat statement, the company said it was confident in its strategy and future growth prospects.

Pre-tax profit excluding exceptional items was £301m, which was higher than analyst forecasts.

This helped send Dixons shares up 18% to 131.5p.

Warranty inquiry

Dixons said it would create 2,200 jobs over the next financial year, including 1,000 in the UK, as part of ongoing expansion plans.

It also said it had cut 300 jobs at its head office since the turn of the year.

Chairman Sir John Collins tried to reassure shareholders about the expected outcome of a Competition Commission inquiry into extended warranties - which are believed to make up as much as 50% of the group's profits.

Critics say the warranties are used to keep prices on actual goods low, but once the customer is in the shop, the profit is recovered by the sale of the extended warranty.

Profit drop

They have been branded a "waste of money" by the Consumers' Association.

Sir John said the commission's inquiry had "absorbed a great amount of management time over the past year".

But he said he hoped its report "would dispel many of the myths that surround this market and confirm the value and peace of mind which customers place on our unparalleled customer service support package".

Profits at Dixons' core UK retail division were down 5% at £240.3m.

It said strong profit growth in PC World was offset by a lower contribution from mobile phone chain The Link, because of reduced subsidies from network operators.

Currys and Dixons both had a "disappointing" peak trading season, it added.