Dixons ditches loss making firms

German firm Mutares will take on the French online retailer, but Dixons Retail Group will have to pay around £58m as a dowry to support ongoing funding of the business.

Dixons shares jumped eight per cent as the disposal should enable it to focus on its more successful UK and Ireland operation, which posted another strong performance with like-for-like sales up six per cent in the three months to July 31.

PIXmania’s woes have acted as a drag on the wider group, with the division slumping into the red with losses of £31.3m in the year to April 30.

It is also selling another loss-making business by offloading ElectroWorld of Turkey to one of the country’s biggest electrical retailers for up to £2m.

Chief executive Sebastian James said the deals will allow Dixons to stick to what it does best.

He added: “I am a passionate believer that Dixons succeeds where we offer our customers an integrated multi-channel proposition, where we are the market leader and that we do best when we stick to our knitting.”

Its Northern European operations also saw a robust start to the financial year, with comparable store sales up five per cent, but sales plunged 12 per cent across Southern Europe, while PIXmania saw a 28 per cent slump.

Mr James said PIXmania would benefit from an “injection of entrepreneurial vigour” from its new owners.

He cheered a “good start” to the new financial year, but added a note of caution over recent signs of a marked pick up in the wider economy.

“Despite some reports of improved economic conditions, we remain cautious on the state of the market for the year ahead,” he said.

Nick Bubb, independent retail analyst, said the group’s move to sell PIXmania and ElectroWorld meant the “dream scenario of an unencumbered UK recovery is very much on the cards”.