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Dixons preparing to dump Pixmania after more losses

In the summer of 2012, the board of DSG (Dixons Group) cracked open the bubbly and congratulated themselves on acquiring an even bigger chunk of online retailer Pixmania. Now, less than 12 months later, that same board is sitting in a big circle, trying to work out which person in the group deserves the most blame for this disastrous takeover. KitGuru borrow the key for the executive rest room and listens intently at the door.

GentleGeeks of a certain age will remember when Dixons kicked off a disastrous online site with a name like pc-components-on-the-web-honest-guv. The management team were told time and time again, by a number of suppliers, that the URL was too long and the concept not thought through enough.

It launched.

It sank.

And that was that.

“Hmmm”, thought the Dixons board-level boffins. “Maybe we can buy success”.

Founded in 2000, Pixmania managed a peak in turnover of around $1 Billion, which is pretty healthy. Dixons (DSG etc) then bought a hefty 77% in 2006 and munched up even more of the Pixmania pie in August 2012 when it handed over almosy $15 million to the company’s founders.

How was the situation received?

Corporate genius and oracle of the IT sector Kate Calvert, then at Seymour Pierce, was reported to have described the purchase as “…a positive step…”

Nice one Kate.

We wonder if she would also describe ‘losing a foot’ as a positive step toward a ‘reduction in shoe costs’?

Things appeared to go wrong almost immediately. In the quarter before Christmas 2012, losses peaked and it has been a pretty much downhill slide ever since.

Having shut all of the Pixmania stores across Europe, the Dixons group managed to turn a profit of almost £95 million into a loss of £115 million – largely due to its on-going Pixmania woes.

Must be fun to sit in the Dixons boardroom, knowing that your decision managed to mask a ‘real world increase in like for like sales of 4%’ with a substantial loss.

CEO Sebastian James has been reported as saying “We’ve spent this year cleaning up the business and focusing it on what it does really well, and we’re now exploring all the options to see what we should do about it this year”.

We’d suggest investing in a time machine and going back to ‘not buy’ Pixmania, but what do we know?

Looks like Dixons is working hard to bury its Pixmania mistake under the rug
Rumour has it that Dixons is working hard to bury its Pixmania mistake under the rug

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KitGuru says: There is now a strong rumour in the UK channel that Dixons is doing everything it can to dump Pixmania. Jobs have been cut and now they’re looking to do whatever they can to try and wash Dixon’s hands of the whole debarcle.

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