DSGi Q4/09

After yesterday's results from Kesa, today it's the turn of DSGi.

DSGi's sales for the year ending 2nd May 2009 were down 1% to £8.2bn, although like-for-like sales were down 9%. In the UK and Ireland, where DSGi makes over half of its annual turnover, sales were down by 11%. But, the eCommerce division - that's dixons.co.uk and PIXmania - increased sales from £652.3mn to £807.4mn [dixons.co.uk will transition onto the PIXmania e-merchant platform in the current fiscal year, and this is expected to help grow the business further].

Private Equity Stakes

Yesterday, Office Depot announced that BC Partners, a leading private equity firm, has invested $350mn in the business. Over time, this could give the private equity firm a stake of roughly 20% in Office Depot.

In a similar deal earlier in the week, Bain Capital agreed to take a stake of up to 23% in China's GOME Electrical Appliance Holdings.

Reuters explained that private equity firms typically seek to take majority control of the firms they invest in, but as leverage has been scarce, minority stake deals have become increasingly common.

Kesa Slumps

Two of the top three electricals retailers in Europe deliver their results this week. Today it was the turn of Kesa Electricals. Tomorrow it will be DSGi.

At the top line, Kesa's revenues increased by 9.8% to £4.95bn, but in constant currency revenues declined by 1.2%, while on a like-for-like basis, revenues declined by 6.2%. Retail profit for the group was £77mn, down from £141mn for the previous 12 months. This decline was principally due to a significant decline in profits at Comet [down from £43mn to £10mn], and at Menaje del Hogar [down from a loss of £1.8mn to a loss of £23mn].

Thierry Falque-Pierrotin, CEO at Kesa, said that: "Darty France, and our established businesses in The Netherlands, Belgium and the Czech Republic, all maintained their market positions and improved gross margins". But in the UK, he said that actions have been taken, "to mitigate the impact of market conditions".

Netbook or Notebook

We've been hearing about the high number of retail returns from Netbooks or Mini-Notebooks for some time now. So, a study published yesterday by The NPD Group is welcome evidence of the misunderstanding between what consumers expect and what they actually get.

NPD's Netbooks II: A Closer Look study found that some 60% of consumers who purchased a Netbook instead of a Notebook thought that their Netbooks would have the same functionality as a Notebook - a fundamental error. Moreover, only 58% of consumers who bought a Netbook after originally considering a Notebook were satisfied with their purchase. But, for those consumers who bought a Netbook, when they considered buying a Netbook right from the outset, some 70% said that they were satisfied.

Despite this level of misunderstanding, and the resulting hit to satisfaction, the threat of cannibalisation across the form factors is very real. IDC's latest note on this shows that Netbook shipments in Q1 09 of 5.7mn units contributed, in some way, to a decline in Notebook sales of around 3.1mn units. As such, the industry needs to find a way of explaining that Netbooks are not the smaller and lighter Notebooks many clearly think they are. In fact, the NPD report found that around 60% of consumers said they bought a Netbook because of the enhanced portability factor, while a majority of those who bought a Netbook never take their Netbooks out of the house! Marketing - looks like it's over to you...

Tesco Q1

Tesco has just published its results for Q1 2010. Revenues increased by 9.7%, although excluding petrol, the increase was 12.6%. Much of this growth came from outside the UK - 11.4% at constant currency, but a whopping 20.1% using 'actual' exchange rates. The non-food side of the business 'resumed modest like-for-like growth', and this includes electricals.

Kesa Exits Switzerland

Kesa Electricals announced earlier today that it hopes to sell its Swiss operations to the electrical retail chain FUST for CHF20mn. Reuters said that analysts see this move as an early indication of things to come from the new CEO, Thierry Falque-Pierrotin. More will be announced when Kesa publishes its full year results on 24th June.

Selling via Twitter

Since 2007, Dell has generated some $2mn revenues at Dell Outlet which can be attributed directly to Twitter activity. An additional $1 in revenue can be indirectly attributed to Dell's Twitter initiative as some customers go on to buy a new system elsewhere on Dell.com.

Dell Outlet sells three types of product:

• Product Returns which have been refurbished to meet all original factory specifications;
• Previously Ordered New systems which were subsequently cancelled, or returned with the packaging intact and unopened; and
• Scratch and Dent products with 'cosmetic' blemishes, but which don't affect performance.

For Dell Outlet in the US, go here. For Dell Outlet in Europe [UK], go here.

Arcandor Bankruptcy

After several weeks of unfruitful negotiations - with potential suitors, and also with the German government - Arcandor has today filed with the Essen District Court to open insolvency proceedings. Principal subsidiaries, Karstadt, Warenhaus, Primondo and Quelle, have also applied for protection from their creditors. Thomas Cook, which is majority owned by Arcandor, is operationally and financially distinct from the other parts of Arcandor, and is therefore unaffected by the insolvency proceedings. Overall, this procedure affects some 43,000 employees, although their salaries are protected until August as part of the insolvency allowance.

Reports have suggested that Metro is still interested in buying some 60 Karstadt stores, and Otto - which is considered to be the world's largest mail order firm - might be interested in parts of Primondo.

Staples

Metro not merging with Arcandor

In the past few weeks, Metro has been linked with stricken Arcandor as a possible buyer of the Kardstadt department store chain. In a recent press release, Metro explained that there were no merger negotiations with Arcandor. Metro already owns the Galeria Kaufhof department store chain.

DSGi

Dell Q1/10

Dell's results for Q1 2010 show revenues down by 23% to $12.3bn, operating income down 54% to $0.41bn, and net income down 63% to $0.29bn. The consumer side of the business was down 16% to $2.8bn, with operating income at 'break-even'. Unit shipments, however, were up by 12%. Dell now claims to have its product on sale in some 30,000 retail outlets worldwide.