Lower margins for Elkjøp Group

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(Updated with Nordic numbers) Elkjøp does not contribute to its owner DixonsCarphone as before. The reason is lower margins – and weakening currencies.

Still, separate markets like Sweden reports good growth and forecasts a 7 percent sales increase for Christmas.

DixonsCarphone reports a 7 percent sales increase like-for-like for UK and Ireland, and 4 percent for southern Europe. But the former star in the Group, Elkjøp Nordics, reaches only 1 percent growth – which leads to a certain explanation from Group-CEO Sebastian James:

”In the Nordics we have made very good progress in getting more match-fit on pricing against pure players, while broadly maintaining profits on a constant currency basis. This has, however, been masked by FX headwinds when translating Nordic profits into Sterling. Sharpening our pricing in the Nordics has inevitably had some impact on margins, but is now closer to being complete,” comments Sebastian James.

Dixons has not yet revealed the figures in local currencies. Elkjøp Group provides ScandinavianRetail.com with the total H1-sales for the Group: Almost 15.2 billion NOK, which is an increase by 7.9 percent from last year. On the other hand has the Norwegian currency weakened compared to the other Nordic currencies, so that won’t give a good picture of each Nordic market.

EBIT for the period was 386 MNOK.

But Elgiganten Sweden has been reported locally – with great numbers.

For the financial year 2014/2015 increased Elgiganten Sweden sales by 6.9 percent to 9.1 billion. It is now followed by a strong first half of fiscal year 2015/2016.

“From May to October we increased sales by 4.5 percent in comparable units while keeping a stable margin level.” says Niclas Eriksson, CEO of Elgiganten Sverige.

In addition, Elgiganten doubled the store network during September and October, with 79 converted Phone House stores in malls and city centres throughout Sweden. In November, the chain continued the effort with four new establishments in Malmö, Täby, Västerås and Uppsala.

Niclas Eriksson says it gives the chain a unique position for this Christmas season, and for the rest of the year.

“The telecom sector has developed extremely well during the year and it is partly due to the merger with Phone House, which strenghtened our telecom offer significantly,” says Niclas Eriksson.

The positive trend has continued into December after a successful seasonal Black Friday that gave a flying start to the holiday shopping season. Last year, sales doubled, and this year it grew by a further 75 percent.

“A steadily increasing demand and a strong start to the holiday shopping season makes me even more convinced that we will do our best Christmas ever and increase sales by 7 per cent against the previous year,” says Niclas Eriksson.