DSG cautious about consumer confidence

By Mark Potter

LONDON (Reuters) - Electrical goods retailer DSG International (DSGI.L) met lowered forecasts with a 30 percent drop in annual profit on Thursday and said it remained "very cautious" about consumer confidence in many of its markets.

DSG, whose store chains include Currys and PC World in Britain, UniEuro in Italy and Elkjop in Nordic countries, said profit before tax and one-off items was 205.3 million pounds in the 53 weeks to May 3, held back by weak sales of computers and its Italian operations.

The firm said in May that underlying profits were likely to be between 200 million and 210 million pounds, following two profit warnings earlier in the year.

At that point, new Chief Executive John Browett laid out a recovery plan which included halving the final dividend, cutting costs and investing in customer service and the Internet.

But that has not stopped DSG shares from continuing to slide amid concerns that Europe's shoppers are cutting back on spending due to rising fuel, food and mortgage costs.

Browett declined to comment on current trading in a conference call with reporters, but said its markets would be "very tough, and it's going to be a challenging year."

Smaller rival Kesa (KESA.L) warned on Tuesday that trading conditions were getting worse.

DSG shares have slumped around three quarters in value over the past year, underperforming the DJ Stoxx European retail index .SXRP by about 65 percent. News last month that U.S. electricals group Best Buy (BBY.N) is planning to open stores in Europe next year has added to the pressure.