May 03, 2004 Store Closures / RebrandingOrganisation: Dixons Group
Analysis and commentary by Echo Research. Dixon Group CEO John Clare handled the sensitive issue concerning the closure of 106 high-street Dixon stores with slick efficiency. Targeted stores were prolonged loss-makers, affected personnel would be 'redeployed', a profit-improvement plan and continued investigation into new store formats were in place. Financial issues surrounding closure costs and Dixons' performance were put into perspective with a pre-close statement, highlighting the strengths of Dixon Group's other brands. The City's reaction: reassured investors and rise in share value. "We have increasing confidence in management. They are doing a very good job"(Fraser Ramzan - Lehman Brothers, Guardian, 29/4). Some analysts remained unconvinced of Dixons' growth prospects, however. Rationalisation was good, but little was said of increasing market competition and downward pressure on prices. "It doesn't say how it will push the chain ahead"asserted Seymour Price's Richard Ratner (bbc.co.uk, 28/4). Another concern, ironically, lay with the strength of Dixon Group's flagship brand. "It is best to avoid having the name of your worst performing subsidiary as your group name,"noted analyst Nick Bubb (Telegraph, 2/5). But Mr Clare was still one step ahead: "I will have a group name in two minutes: that is not an issue"(Richard Fletcher, Telegraph, 2/5).
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