 Dixons is planning to move away from the High Street |
Dixons is to close a third of its High Street stores over the next three months following disappointing sales. The firm added it was also hunting for a better format, possibly moving to bigger and cheaper out-of-town sites.
About 1,000 staff will be hit by the 106 shop closures, which will cost �48m, but Dixons hopes a "significant number" would be moved to other stores.
The firm, which also owns Currys, PC World and The Link, added it was on target to hit profit forecasts.
Analysts are expecting the firm to report profits of between �320m and �330m.
Testing times
The Dixons group currently operates 320 Dixons stores in the UK and Ireland.
Chief executive John Clare said: "Following a prolonged period of disappointing trading in our smaller Dixons stores, we have decided to close operations in 106 locations."
The firm added that performance at the stores had worsened since Christmas.
No details were given of which stores were earmarked for closure, but a spokesman said all of the sites were within five miles of another store.
The closures are part of a review of how best to develop the Dixons format for the future.
The company has been battling against tough competition in the UK from fellow retailers such as Argos, Tesco and online sellers - while profits have been squeezed by high store rents and low prices. Tests of new format stores will continue as part of the profit improvement plan for the chain, the company added.
The company has already been piloting a larger format - known as Dixons XL - around the UK in areas such as Cardiff, Swansea, Hull and Birmingham's Bullring.
The new stores, whose locations range from the High Street to out-of-town retail parks, are a cheaper proposition as they have a lower rental per-square-foot.
'Rent rises'
However retail analyst Richard Ratner at Seymour Pierce was sceptical about what difference an out-of-town move could make to the chain.
"There's a short term benefit to profits, of �5m to �6m, but they're still seen to have a problem with the Dixons stores. Despite exiting 106 sites it is still facing rent rises elsewhere and price deflation."
He added that although Dixons said it was rationalising, "it doesn't say how it will push the chain ahead".
Mr Ratner added that Dixons outlets "may migrate completely out of town" following the group's success with a similar move for Currys.
But Richard Perks, director of retail research at Mintel disagrees.
He argues that Dixons is merely following a consumer-led trend to head out of the High Street and on to bigger out of town stores with more products on offer.
"It's saying a lot of stores are too small ... therefore it's closing its marginal shops and concentrating on bigger ones that do better," he added.
Union anger
As news of the store closures was given, the company also announced that sales across the group grew by 14% over the year to 1 May, helped by a big rise in international sales.
On a like-for-like basis - which strips out the impact of new store openings - group sales were up 3%.
Shopworkers' union Usdaw was critical of the store closures.
General secretary Sir Bill Connor said: "There will be considerable confusion among workers at Dixons, with the company announcing store closures and job losses on the back of reporting growth in sales.
"Our members at Dixons deserve to get a full explanation for the reasons behind this decision."
However, investors welcomed the move by the company and shares in Dixons were up nearly 3% at 157.75p in morning trade.
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Our members at Dixons deserve to get a full explanation for the reasons behind this decision 
