Electrical retailer Dixons Retail forecast full-year profit around the bottom end of market expectations after Christmas sales in the UK were hit by December's adverse weather.

The company, which runs the Currys and PC World chains in Britain and Ireland, UniEuro in Italy, Elkjop in Nordic countries and Kotsovolos in Greece, said it expected underlying profit before tax in the range of £100 million to £110 million in fiscal 2011.

Dixons said sales at stores open over a year fell 2 per cent in the 12 weeks to January 8th, its fiscal third quarter. That compares with analyst forecasts for a fall of 2 to 9 per cent, according to a Reuters poll, and with a second-quarter fall of 1 per cent.

Gross margins across the group were down 0.2 per cent.

"We remain cautious about the economic outlook across our markets," said the firm.

Dixons, which makes all its profit in the second half, is two and a half years into a turnaround plan that has focused on selling underperforming businesses, cutting costs, revamping stores, opening larger stores and improving product ranges and service.

The programme has generally been well received by analysts, but Dixons' share price has fallen by 40 per cent over the last year.

Investors are concerned about macro-economy headwinds, competition from supermarkets and pure-play internet retailers, and the arrival in Britain of US firm Best Buy.

The stock closed at 22.7 pence yesterday, valuing the business at £820 million.

Reuters