Dixons compounds strong start by offloading problematic PIXmania - UPDATE

As well as reporting growing market share in the first quarter, electronics specialist Dixons Retail has received an offer for its problematic PIXmania arm and hinted to analysts about the reinstatement of its dividend in the next couple of years. The FTSE 250 group, which owns Curry's and PC World chains, lifted like-for-like sales across its European multi-channel businesses by 4% and also sold its Turkish Electroworld business for £2m. But the irrevocable offer from German investment company Mutares for PIXmania, the lossmaking Franco-Czech online retailer that had weighed uncomfortably on Dixons results year, could be the new that interests the market the most. However, the terms of the offer may disappoint some, as the sale is not immediate and involves Dixons contributing €69m of ring-fenced cash to support Mutares' plan and for the ongoing funding of the business.Dixons Chief Executive Sebastian James said PIXmania needed the kind of "entrepreneurial vigour" that Mutares would inject, and if the transaction progresses, the German company "will acquire PIXmania with a well funded balance sheet and an excellent management team".Looking at the core operations at the rest of the group, James was encouraged by the performance in the first quarter ending July 31st."Margins have held up reasonably well across the Group despite some anticipated and vigorous skirmishes in the Nordics where, I am happy to say, we have continued to grow market share."While Northern Europe drove like-for-like sales up 5% as further market share gains counterbalanced a strong performance last year, Southern Europe saw continued difficult conditions as well as cooler summer weather affecting air-conditioning sales, with like for likes down 12%.Looking forward, James said: "Despite some reports of improved economic conditions, we remain cautious on the state of the market for the year ahead. But with this good start, I am excited about the rest of the year and about the future for a successful and simplified group."After a conference call between top management and City analysts, Barclays issued a note that reported on a "strong message" regarding trading in core markets and "significant progress made in eliminating losses in its noncore businesses", with management sounding "cautiously optimistic" about the conditions in Northern Europe. The disposals of PIXmania and Electroworld Turkey have bolstered Barclays' bullish investment thesis, leading the broker to add that Dixons is both "a very credible restructuring story - even more so now - and one that should visibly benefit from the potential improvement in the UK consumer environment". Although the trading environment in Northern Europe remains fiercely competitive, Dixons's market leading position places it in a "position of strength". While hopes of a dividend reinstatement may be premature, Barclays said it thought "it should certainly be considered in the medium term, which was implied in the call today". Shares in Dixons Retail were up 6.2% at 46.98p at 15:31 on Thursday.