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Dixons Carphone says large TVs drive Christmas sales

FILE PHOTO - The headquarters of Carphone Warehouse is seen in west London May 15, 2014. REUTERS/Toby Melville/File Photo

By James Davey LONDON (Reuters) - Rising sales of large-screen televisions helped Britain's Dixons Carphone beat forecasts for trading in its key Christmas quarter and offset sluggish sales of mobile phones and tablet computers due to poor availability. The company, which trades as Currys, PC World and Carphone Warehouse in its home market, Elkjop and Elgiganten in Nordic countries and Kotsovolos in Greece, maintained its profit guidance for the 2016-17 year. Although Dixons Carphone has had a strong run of trading over the last year its shares have lost around a third of their value, reflecting its exposure to high-cost goods and perceived vulnerability to any consumer spending squeeze this year. Robust consumer spending has been the main driver of Britain's economy since June's vote to leave the European Union. However, economists predict spending could be dented in 2017 as inflation erodes real earnings growth. Shares in Dixons Carphone gave up early gains and were down 3 percent by 0931 GMT, which analysts said reflected the lack of a profit upgrade and some disappointment in phones, where profit margins fell. The firm said demand for large screen TVs, which it sees as a gauge of consumer sentiment, was a major factor behind a 9 percent jump in underlying electricals sales in the UK and Ireland over the 10 weeks to Jan. 7. Finance director Humphrey Singer told reporters there was no sense that Britons were splashing out before tightening their belts in 2017 in the expectation of price rises, pointing out that TV prices naturally deflate at about 10 percent a quarter. Chief Executive Seb James said patchy availability of the larger, higher margin phones, such as the Google Pixel XL, and tablets dented sales in those categories. But he said the problem should be a one-off. Group sales at stores open for more than a year rose 4 percent in the third quarter period, ahead of analysts' consensus forecast for a rise of 2.5 percent and compared with a first-half increase of 4 percent. "We believe that we have outperformed the market during the period," said James. Like-for-like sales in the UK and Ireland rose 6 percent, ahead of analysts' average forecast for 3.5 percent growth - though 4 percent of the growth was due to sales transferred from closed stores. Underlying sales rose 5 percent in the southern Europe division but fell 1 percent in the Nordics, where the firm focussed on improving its profitability. Overall group margins were flat. Dixons Carphone forecast a 2016-17 underlying pretax profit of 475-495 million pounds ($592-$617 million), up from 447 million pounds in 2015-16. Last month it reported a 19 percent rise in first-half profit, but said it was planning for the possibility of more uncertain times ahead. ($1 = 0.8019 pounds) (Editing by Mark Potter and Louise Heavens)