Sales for six months to November

PC World +5% The Link -9% Currys +6% Dixons -1% Total: +2.3%

Dixons shares have risen strongly in recent months but slipped back in Wednesday trading as investors digested the unwelcome, but not unexpected, news on mobile phone and PC sales.

DVDs do well

PC and mobile phone sales account for about 40% of Dixons' total sales and even more of its profits.

But during the reporting period, PC sales fell 17% overall, even though PC World's sales rose by 5%.

Mobile phone sales at The Link fell 9%. The group did not divulge the extent of the fall in mobile phone sales for the group as a whole.

You have to bear in mind that the... growth comes against a very strong consumer backdrop. What does that say about future growth?

Peregrine Riviere, analyst, Morgan Stanley

Strong sales of kitchen and entertainment products - such as computer games, large screen televisions, DVDs and electrical appliances - failed to lift the profits.

"It was a reasonable performance and it would have been good if it were not for mobile phones," said finance director Ian Livingston.

"You cannot strip out mobile phone sales when it suits you," responded WestLB analyst Justin Scarborough.

Strong sales

The group's sales rose 2.3% to �2.22bn, yet pre-tax profit fell to �87.4m from �90.8m a year earlier.

During the eight weeks to 5 January this year, group sales rose 4%.

Peregrine Riviere, an analyst at Morgan Stanley, said investors had been too enthusiastic about buying Dixons shares.

"You also have to bear in mind that the... growth comes against a very strong consumer backdrop," he said. "What does that say about future growth?"

Although Dixons' profits were at the high-end of analyst expectations, they were hit by start-up costs for the group's new businesses in continental Europe, where sales rose 20%.

The profit figure did not include losses from the internet service provider, Freeserve, which was sold last year.

New jobs

Despite the gloomy data, Dixons aims to create 1,400 new jobs this year as it presses ahead with expansion plans announced last year.

"New technology is expected to be one of the strongest areas of consumer expenditure and the group's strong market and financial position ideally places it to take advantage of these opportunities," said outgoing chairman, Sir Stanley Kalms.

Dixons shares fell 6% in early trading as some investors, shocked by the revelations about the weakness in some of the group's key markets, ditched the stock.

The share price had risen 40% in recent months in anticipation of strong Christmas sales.