DSG International Plc Ordinary 2.5p (DSGI)

Company overview

DSG Intl is Europe’s largest electrical goods retailer. The company has more than 1,400 stores across the UK and Europe. It trades as Currys, Dixons and PC World in the UK and Ireland, while various local brand names are adopted across a wide area of Europe.

HL Comment (14 January 2010)

DSG International (formerly Dixons Group) enjoyed generally positive Christmas trading. The group’s recent trading update (14Jan2010) saw underlying total group sales up by 11pc, with like-for-like sales rising by 8pc. Progress was generally made across the group’s brands and territories, with online sales rising by 16pc for the period. The one area of disappointment proved to be the company’s UK PC World business, with reduced business sales outweighing the additional demand which the launch of Windows 7 brought.

Negative Points

• Management stressed caution with regards to the 2010 outlook for Europe, particularly the UK.
• A temporary reduction in VAT has now ended, with other potential tax increases likely to be aired in the run-up to a UK general election.
• No dividend payment is currently being paid.
• The group’s international portfolio still encompasses many of the debt stretched Southern European countries (Greece, Italy and Spain).
• US electrical giant Best Buy is soon to commence operations in the UK.
• The decline in the pound is adding to many product costs, manufactured and imported from the Far East.

Positive Points

• A transformation plan appears to be aiding performance – many stores have been revamped. Furthermore, the group remains on track to deliver £50m of cost savings this year, part of a £200m targeted 4 year programme.
• Recent sales trends have continued to improve.
• A multi-channel sales approach is being pursued.
• A successful fund raising has aided group debt reduction.
• Despite restructuring, the group still enjoys geographical diversification.
• The wider economy has shown signs of stabilizing, with growth in unemployment levels recently slowing.

Consensus
On balance, market consensus opinion currently denotes a strong hold.

All yield figures are variable and not guaranteed.

Fundamental Data

Year Ending	Revenue (m)	Profit Before Tax (m)	EPS (p)	P/E Ratio	PEG	EPS Growth (%)	Total Dividend	Dividend Yield
02-05-2009	8,364.60	(140.40)	(12.47)	32.00	n/a	(90.00)	n/a	n/a
03-05-2008	8,488.00	(184.10)	(15.58)	5.20	n/a	635.00	5.45	10.70
28-04-2007	7,929.70	114.10	1.33	89.40	n/a	(86.00)	6.54	5.50
29-04-2006	7,072.00	302.90	8.63	14.70	3.70	4.00	6.23	4.60
28-04-2006	6,984.40	295.90	8.26	15.30	1.50	10.00	6.23	4.60