Dixons shares took a tumble this morning after the UK's favourite electrical retailer warned markets it was unlikely to hit profit targets for the year.

The company said sales were down 11 per cent in the UK and Ireland and had fallen 7 per cent across the group. It expects profits for the full year of around £85m.

Market reaction pushed Dixons shares down almost 11 per cent to 14.95p in early trading.

The retailer has laid out a four-point response plan to turn trading around.

It will review business in Spain and even consider leaving the country.

Dixons will cut capital expenditure to £160m or less in 2011/2012 and cut another £10m from this figure the year after. It will concentrate spending on shops likely to provide the greatest return. This means 55 to 60 shops in the UK will get tarted up, along with about 10 megastores in the Nordics.

The retailer said it would focus on cash generation and make extra cost-cutting measures.

It said consumer confidence, especially in the UK, was even weaker than expected since its last trading update.

Dixons ecommerce operations – including Dixons.co.uk and Pixmania – continue to grow strongly.

Dixons Retail, which trades as PC World, Currys and the Tech Guys is in the middle of revamping its shops and improving staff training. It said today the Renewal & Transformation Plan was working and it would stick to it. ®