More than 1,000 staff could lose their jobs at DSG International, the owner of Currys and PC World, after the group’s new chief executive revealed plans to change fundamentally the way the business is run.

John Browett, who joined from Tesco in December, insisted yesterday that although DSG had a bright future, it had failed to move with the times, its stores and product ranges were tired and the customer service was poor. “We have lost our edge,” he said.

A five-point turnaround plan will see DSG pin its revival hopes on the internet – it aims to more than double online sales – and attracting customers to revamped, out-of-town stores across the UK and Europe. Funding for the recovery drive will come from cost-cutting expected to cause 400 head office staff to lose their jobs, nearly one in four roles.

A total of 77 Currys.digital high street stores will close over the next five years as leases on the sites expire. The stores each employ an average of ten staff. The dividend, as widely expected, will be cut in half.

Shares in DSG closed down 5½p, or 8 per cent, at 63¾p, as Mr Browett admitted that it could take until 2010 for the first signs of any improvement in the business.

Analysts said that the comments amounted to the third profit warning of the year and they cut pretax forecasts for 2008-09 to as low as £135 million. DSG confirmed yesterday that its pretax profits for the 2007-08 would be £210 million at best. The group reported profits of £335 million in 2005.

Mr Browett refused to blame John Clare, his predecessor, for the down-turn in DSG’s fortunes.

He said that the arrival of BestBuy, the US giant that last week announced plans to open stores in the UK, would only help to fuel DSG’s recovery effort. He said: “The first thing I thought when I heard about BestBuy was ‘Oh good, this is a clear mechanism that we can use in the business to go faster’. It’s really galvanised people.”

He added: “The past is not the thing I focus on. I’m looking at how to make improvements from where we are. I knew exactly what the situation was when I joined, I’d done my due diligence. There are lots of good people here who want the business back on top and are very excited and behind the plan.”

More computers will be stocked in PC World at the expense of office supplies. The 100 smaller Currys. digital stores set to remain open will no longer carry washing machines, but instead focus on laptops and gaming.

Mr Browett added that DSG had to “win the internet”, where it generates £1 billion of sales a year – about 12 per cent of total group revenue. He wants this to rise to 30 per cent of the group’s business.

DSG is committed to UniEuro, its underperforming Italian operation, but Mr Browett will review Electro-World, its Central European chain, and PC City, its Spanish arm.

Across the business, he is aiming for an operating margin of between 3 and 4 per cent, almost double today’s level.

Philip Dorgan, an analyst for Panmure Gordon, downgraded DSG to a “sell”. He said: “The fact DSG is now run by an ex-management consultant means that the statement is long on words. In these circumstances we prefer to concentrate on the numbers and, for the most part, they do not make very pretty reading.”

Words v Numbers

‘We have developed radical and detailed plans that will transform the very DNA of our business’
John Browett, chief executive, DSG

‘The statement is long on words. We prefer to concentrate on the numbers and they do not make pretty reading’
Philip Dorgan, analyst, Panmure Gordon

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