U.K. retailer links poor profits to Vista sales

DSG International profits drop for first half of year, partly due to slow Vista-related hardware sales at its PC World stores.

Poor sales of Windows Vista-related products have hit the profits of retailer PC World, according to its parent company, DSG International.

In an interim trading statement issued on Thursday, DSG said a 0.6 percent drop in its group profit margin over the 24 weeks to October 13 was "largely driven by slower Vista-related hardware sales and a changing sales mix in computing."

"PC World delivered good sales performance against a tough prior-year comparative in the back-to-school period," said the group's chairman, John Collins. "The reduction in laptop stocks that arose out of disappointing sales of Vista-related products and a changing sales mix have reduced gross margins by around 2 percent in the computing division, impacting group profits by around 20 million pounds ($40.68 million) in the first half. Stocks are now at normal levels, and we expect to recover some of the lost margin through the second half."

Windows Vista was released to business customers in November 2006 and consumers in January this year.

A recent U.S. report comparing early sales figures of Vista and its predecessor, XP, has suggested that Vista is selling poorly there.

Research released earlier this month also claimed that business sales of PCs with pre-installed Vista were slowing.

However, Dell has come out in support of the operating system with a prediction that most of its business customers will have migrated to Vista by 2009.

David Meyer of ZDNet UK reported from London.