Slow adoption of Microsoft Vista has hamstrung profits again at DSG, the retail group that owns PC World.

In a statement to the stock exchange today, it warned that overall group profit margins for the 24 weeks to 13 October will be down 0.6 per cent "largely driven by slower Vista-related hardware sales".

PC World has been forced to slash prices because Vista machines aren't shifting as fast as it'd hoped. The store's own margins are down two per cent.

It'll slice £20m off group first half profits, and year-on-year income will be down. DSG has revised its Vista strategy and ordered fewer copies going forward than it expected to. Away from Vista's shaky start, PC World sales have been "strong", the group reported.

Chairman John Collins said DSG was "cautiously optimistic" about the run-up to Christmas with sales of flat screen, digital cameras, iPods, and other consumer electronics. New chief executive John Browett takes the reins on 5 December.

Adding to the mixed outlook, the Italian Unieuro computer store division continued to struggle, with DSG blaming poor consumer confidence. Unieuro's MD Mark Rollman has quit for "personal reasons", DSG said.

At time of writing, traders had sent DSG shares tumbling 3.77 per cent. The official trading statement is here. ®

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