Dixons Retail pays to rid of PIXmania

LONDON, Sept 5 (Reuters) - Dixons Retail, Europe’s second-biggest electrical goods retailer, is to pay 69 million euros ($91 million) to a German firm to take the loss-making PIXmania e-commerce business off its hands.

PIXmania, which saw underlying sales fall 28 percent in its first quarter, has been dragging down the performance of the group as it battles difficult markets across Europe.

Dixons said on Thursday it had received an irrevocable offer from mutares AG, a German listed industrial holding company, to purchase PIXmania, which operates in France and the Czech Republic, sending its share price up nearly 8 percent.

The shares, which have more than doubled in price over the last year, were up 3.2 pence at 47.43 pence at 0730 GMT, valuing the business at about 1.7 billion pounds.

The deal, which is subject to a consultation period with PIXmania’s French works councils, would see Dixons provide the cash to support mutares’s plan to develop the business.

“In order to succeed as a pure play e-tailer, PIXmania needs a different kind of entrepreneurial vigour,” said Dixons Chief Executive Sebastian James.

In June Dixons booked restructuring and impairment charges of 168.8 million pounds ($264 million), relating mainly to PIXmania and the disposal of its Equanet business.

Dixons also said on Thursday it had agreed to sell its loss-making ElectroWorld operations in Turkey to local firm Bimeks for about 2 million pounds.

News of the disposals came as Dixons, home to the Currys and PC World chains in Britain, Elkjop in Nordic countries, UniEuro in Italy and Kotsovolos in Greece, said sales at stores open over a year rose 2 percent in the 12 weeks to July 31, in line with analysts’ expectations.

Like-for-like sales were up 6 percent in the UK and Ireland and up 5 percent in northern Europe. But they fell 12 percent in the southern Europe division.

Across Europe many store groups are still struggling as government efforts to bring down national debt reduce consumers’ disposable incomes. Electrical retailers have been particularly exposed because they sell discretionary goods and face intense competition from supermarkets and internet retailers such as Amazon.

But in Britain Dixons has benefited from the demise of rival Comet and the partial exit of Jessops and HMV. It has also been cutting costs, revamping stores and seeking to improve products, prices and service.

($1=0.7577 euros) ($1=0.6399 British pounds)

(Editing by Neil Maidment and Greg Mahlich)