Electrical retailer Dixons has issued a profit warning, becoming the latest store group to report worsening trade as shoppers are hit by rising prices and government cutbacks.

Dixons, which runs the Currys and PC World chains, said profit before tax and one-off items for the year ending April 30th was likely to be around £85 million.

Analyst forecasts were in a £85-109 million range, according to the company, while the median estimate was £105 million.

Dixons said sales at British and Irish stores open over a year fell 11 per cent in the 11 weeks to March 26th.

"Consumer confidence across a number of our markets has deteriorated, particularly in the UK and Ireland," Dixons said. "We expect it to continue to be (fragile) through much of 2011."

A string of British retailers have reported a downturn in trading since the start of the year as inflation rises and austerity measures bite, raising fears that a fragile economic recovery could be derailed.

Dixons said it was considering exiting a tough Spanish market and would reduce capital spending to no more than £160 million next financial year.

It will also aim to cut annual costs by £50 million for the next three years, extending a previous two-year target.

Dixons shares have lagged the Stoxx Europe 600 retail index by 50 per cent over the past year. They closed at 16.75 pence yesterday, valuing the firm at about £599 million.

Reuters