Dixons does not think it will enjoy a festive bonanza

The firm, which also owns Currys and PC World, said it was "cautious" about the sales of expensive items such as plasma televisions and hi-fis this winter.

Dixons said it was now preparing for what should be an "aggressive trading environment" over the festive period.

Its statement comes after the British Retail Consortium said sales in October grew at the slowest pace this year.

At 0945 GMT shares in Dixons were down 6.75% , to 155.5p, in London trade.

'Satisfactory'

For Dixons, UK sales grew by 6% on a like-for-like basis in the 28 weeks to 13 November, compared with an improvement of 7% in the 18 weeks to 4 September.

We are cautious about the outlook for consumer expenditure on high-ticket discretionary purchases across the balance of the year Dixons boss John Clare Follow Dixons' share price

Currys was the group's strongest performer with a rise of 9%, while PC World and Dixons both gained 3%, and its other subsidiary company - The Link - improved by 8%.

Dixons chief executive John Clare described the performance in the financial year to date as satisfactory.

"The rate of sales growth has slowed in recent weeks and we are cautious about the outlook for consumer expenditure on high-ticket discretionary purchases across the balance of the year, particularly in the UK," he said.

Retail analysts said the sector as a whole did not appear to share Dixons' scepticism for the festive period.

"The general mood seems optimistic about Christmas," said Nick Gladding of Verdict Research.

Overseas success

Dixons suffered a dismal Christmas in 2002, before bouncing back last year, and said its performance for this financial year would be "significantly affected" by the next few weeks.

The company also said gross margins across the group were 0.7% lower than a year earlier.

It blamed the fall on more business-based sales, the willingness of customers to settle accounts at the end of interest free periods and a change in the product mix at some of the company's electrical businesses.

Including international operations, Dixons said total group retail sales were 9% stronger than a year ago, with the figure up 5% on a like-for-like basis.