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To: Sector Investor who wrote (30313)	1/14/1998 9:25:00 AM
From: Glenn D. Rudolph	Respond to of 61433

INTERVIEW-Dixonsblames PCs for Xmas upset Reuters Story - January 14, 1998 03:00 %RESF %GB %RET DXNS.L INTC V%REUTER P%RTR LONDON, Jan 14 (Reuters) - Britain's leading electricals retailer Dixons Group Plc on Wednesday blamed a sharp fall in personal computer sales for a drop in Christmas trade. Finance director Robert Shrager said main factor was the sharp fall year on year in the sale of personal computers. "That really explains the whole thing," he said by telephone. The company warned in its Christmas trading update that current year profits would be below market forecasts, which Shrager said were currently around 230 million pounds. Without computers the group would have performed reasonably well over Christmas, Shrager said. Computers saw strong sales growth through the first half, but there was a sudden decline in early November. "There seemed to be some reluctance for consumers to buy that sort of product over Christmas," he said, but added that there was a lot of evidence of large ticket purchases being deferred until the January sale. This inevitably hit margins, but the sales mix meant that gross margins year on year were flat over the Christmas period, the finance director said. Shrager said Dixons sales figures for personal computers showed strong demand in May, June and July, when shoppers were spending windfall cash received from mutually-owned building societies switching to banks. Unit sales of personal computers in June were up 100 percent year on year, but sales growth slowed suddenly at the beginning of November and by mid-November showed a 12 percent decline year on year. Shrager said press comment about Intel dropping microchip prices by up to 40 percent might have persuaded people to put off purchases. "There is no evidence that anything fundamental has happened to the personal computer market in terms of overall consumer demand and appetite," he said, "but only time will give us a better picture of what's happened." Shrager said Dixons benefited in every product group from the windfall spending, but then there was a slowdown. He said the market for televisions, video and audio equipment - brown goods - had been weak since the summer windfalls. "What we think has happened is that the windfalls have had quite effect in sucking forward sales, sales that would have been made at a later period possibly over Christmas." He said the impact of the windfall spending in the summer, plus shoppers tendency to wait for the sales, had produced an unusual trading pattern. He pointed to the upturn in personal computers so far in January, with unit sales in the week to January 3 up 58 percent and last week up 40 percent. His verdict on Christmas overall was that it was reasonable but not a bonanza.