Finance director Ian Livingston said the group had budgeted for a big drop in sales from a spike upwards this time last year, when shoppers were spending windfall cash received as mutually owned building societies switched to become banks.

``We had expected a significant correction this year over this time period,'' he told Reuters in an interview. ``As it turned out, the correction wasn't quite as bad as we had expected.''

He said that like-for-like sales had been up by about 30 per cent this time last year, fuelled by the demutualisations of the Alliance and Leicester, Halifax and Norwich Union over a very short time period.

``We had a really strong spike in sales this time last year which was quite unexpected by everyone.''Livingston said although Dixons' current sales had to be seen in the context oflast year's unexpected surge, the group also recognised that the consumer was being very cautious.

``There are certainly no signs of inflation coming through,'' he said, ``the consumer is being cautious but he's still out there buying things.''Earlier Dixons reported that sales fell by 10 per cent over the first nine weeks of its current financial year, on a comparable store basis.

Looking ahead, Livingston said the group expected a boost from the launch of digital television this year, but the full impact would not come through until the next financial year.

The finance director said the group would start stocking set-top boxes for digital TV in late summer and integrated TV sets in autumn.

But he said the first full year that the impact would start to be seen would be the next financial year - 1999-2000.

``We've always said to people not to expect a big boost this financial year...we don't want to talk it up too much.''