Dixons posts rise in Christmas sales as wins market share

LONDON, Jan 16 (Reuters) - Dixons Retail (Other OTC: DSITF - news) , Europe's No. 2 electricals retailer, posted a rise in sales in the key Christmas trading period, gaining market share from rivals, though it cautioned that growth would slow.

"We have some very strong comparables in the fourth quarter and, with a later Easter as well, I expect performance in the remainder of our financial year to be more modest than the year to date," said Chief Executive Seb James, adding that the UK's economic recovery was still in its "fledgling" stage.

The group, home to the Currys and PC World chains in Britain, Elkjop in Nordic (SES: MR7.SI - news) countries and Kotsovolos in Greece, said on Thursday group sales at stores open over a year rose 3 percent in the Nov. 1 to Jan. 4 period, driven by sales of tablet computers, kitchen gadgets and big screen televisions.

That compares with first half growth of 6 percent.

Like-for-like sales in the UK and Ireland (Other OTC: IRLD - news) rose 5 percent, helped by a particularly strong post-Christmas sale, and were up 2 percent in northern Europe. Sales in Greece on the same basis were, however, down 8 percent.

Gross margin for the group fell 0.5 percent, reflecting the mix of products sold.

Across Europe many store groups are still struggling as government efforts to bring down national debts reduce consumers' disposable incomes. Electrical retailers have been particularly exposed because they sell discretionary goods and face intense competition from supermarkets and internet players like Amazon and eBay.

In Britain, Dixons' biggest market, the retailer has benefited from a tablets boom, as well as the demise of major rival Comet in 2012 and problems at Jessops and HMV. It has also been cutting costs, revamping stores and seeking to improve products, prices and customer service.

Shares in Dixons, which trails Metro (Toronto: MRU.TO - news) 's Media-Saturn by annual sales, have increased 85 percent over the last year as it has increasingly focused on markets where it has a leading "multi-channel" position with a combined stores and internet business.

Over the last six months the firm has offloaded the loss-making e-commerce business PIXmania and operations in Turkey and partially exited Italy.

Shares in Dixons closed Wednesday at 50.4 pence, valuing the business at 1.85 billion pounds ($3.03 billion).