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DSG forecasts poor sales continuing into 2010

DSG International, the owner of PC World amongst other leading electrical brands in the UK, has this week forecast that weak sales will continue into 2010 with like-for-like sales forecast to fall by almost 10% in 2009. The company is also seeing significant pressure on profit margins and pricing strategies and with a high fixed cost base it would appear inevitable that more job losses will be announced in the short to medium term.

Companies such as DSG International are amongst the leaders on the UK high street and the heartbeat of the UK retail sector. If they are struggling then there is no doubt that the rest of the sector will be feeling the pain, with many set to fare worse than the likes of DSG International.

The impact of reduced retail sales on the overall UK economy should not be underestimated as this will place pressure on employment in the retail sector which will in turn place pressure on disposable incomes and reduce spending again in this sector. This vicious circle will continue until cost and income levels for the U.K.'s retail sector reach a level whereby they can consolidate and start to move ahead again. How far away this crossover point is remains to be seen but there would appear to be more pain on the way.

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