DSG halves divi
Electronics retailer DSG International plans to slash its dividend in half, beginning with the full year to 3 May 2008, as part of a five point plan for the renewal and transformation of the group, announced today.
Some 77 Currys stores are earmarked for closure with costs of £50m to be stripped from the business this year, with as many as one-in-four jobs going at its head office.
The company, which has issued two profit warnings in 2008, is also writing off around £395m in the 2007/08 results, £340m of which relates to the struggling Italian operations.
It wants to cut costs by £50m in 2008/09, but will need to boost capital expenditure, currently at £160m a year, by around £110m in total over the next three years to deliver the programme.
The news came as DSG said sales rose 8% in the 53 weeks ended 3 May and by 1% on a like for like basis in very challenging trading conditions, especially in the UK, Italy and Spain.
Full year underlying profit before tax is still expected to be between £200m and £210m, in line with previous indications.
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Chief executive John Browett said the firm "has not kept pace with its core customer needs, particularly in the UK."
DSG reckons an operating margin of between 3%-4% is achievable medium term and says the transformation programme should begin to reveal tangible benefits in the 2009/10 financial year.
The final dividend for 2007/08 tumbles to 3.43p per share from 6.85p a year ago, making a total for the year of 5.45p, while a payout of 4.44p is expected next year.
"The board believes that the group should have an objective of rebuilding dividend cover to 2.0x underlying earnings," it said.
"Once this objective has been achieved the board considers that the group should be capable of growing dividends in line with earnings."
