Dixons Stores Group (DSG) has blamed poor sales of Microsoft's Windows Vista for a £20m slump in UK profits.

DSG said in a trading statement issued today that lower than expected sales of the operating system in its PC World stores had cut profits by two per cent, and led to stock control issues after the company ordered too many Vista-loaded laptops.

"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 two per cent in the computing division, impacting Group profits by around £20m in the first half," said DSG group chairman Sir John Collins.

"Stocks are now at normal levels and we expect to recover some of the lost margin through the second half."

Overall the group is optimistic about the future of its UK business, although Collins said that concerns remain about the outlook for 2008 retail sales.

The Christmas period, which typically accounts for half of DSG's profits, looks good for the company. Strong sales are expected for high-definition TVs, iPods, MP3 players, laptops, digital cameras, games consoles and sat-nav equipment.