High street computer retailer PC World – part of the DSG International chain of companies which includes Currys and Currys.digital – is feeling the crunch according to a statement
published by CEO John Browett yesterday.
Like-for-like sales throughout the company have dropped one percent in the six-month period leading up to April 2008, and while that might not seem like a massive figure it has lead to a £30 million drop in profit for the chain – a massive blow in difficult economic times.
Browett singles PC World out as a particularly poor performer, reporting PC sales as being ten percent lower than anticipated. He describes the slump as evidence that “customers have become increasingly promotion- and deal-driven
The massive slump in pre-tax profits follows a warning issued by the company in January of this year, when the group describe trading over the Christmas period as being extraordinarily weak. The warnings are enough to make investors ponder, too – DSGi shares dropped nine percent yesterday after Browett issued his statement.
While the chain is in no danger of folding quite yet, it's clear that the ever-increasing number of online computer retailers with no bricks-and-mortar presence offering cut-price goods – often half the price as is available from PC World and its ilk – combined with the currently weakened consumer environment is going to lead to some belt-tightening all round.
Browett, who joined the company from his previous post at supermarket behemoth Tesco in June 2007, is expected to announce the first results of his review of the business on the 15th of May this year. Whether job cuts or store closures are in the pipeline isn't yet known, but it's clear that money will have to be saved somewhere if investors aren't going to start fleeing the sinking ship.
Do you ever shop in a high street store for your components, or would you only be seen dead in a PC World for those late-night “I've just fried my graphics card and I need my WoW fix
” emergencies? Discuss over in the forums