Kesa reveals Comet sales gloom

COMET parent Kesa Electricals today reported a three-fold increase in UK half-year losses as second quarter sales slumped 10 per cent.

The retailer saw trading worsen significantly after a buoyant first quarter that was boosted by the World Cup, when UK like-for-like sales rose 4.3 per cent thanks to a surge in flat screen television sales.

Kesa said its Comet chain in the UK saw losses widen to 6.4 million euros (5.4m) in the six months to October 31 up from 1.8 million euros (1.5m) a year ago, while sales dropped 2.6 per cent to 864.1 million euros (726.6m).

It added the recent snowy weather had also hit recent trading, which the retailer hoped to make up before Christmas and on Boxing Day.

The retailer said Comet's second quarter figures were a result of a slump in sales following the World Cup and because of tough comparables in the previous year when it gained market share.

It launched a three-year recovery plan for its 249-strong Comet chain earlier this year that involved refitting stores, sharper pricing and changing its product mix to include more kitchen and beauty products and accessories.

Online sales increased by 8 per cent in the half-year and now account for 14.6 per cent of revenues after it revamped its website and added more products to its online offer.

Kesa said sales of 'tablets' such as iPads had been strong across Comet in the run up to the key Christmas period.

It is facing increased competition from the entrance of Best Buy into the UK market and from a resurgent Dixons Retail, which owns Currys and PC World.

Dixons, which reported its half-year results last month, revealed slowing like-for-like sales growth in the second quarter without the boost provided by the World Cup and warned it expected the key Christmas trading period to be competitive.

Kesa Electricals, which trades in 10 countries including France where it is the market leader, showed a better performance across its French operations offset the UK woes, with half-year pre-tax profits up 283 per cent to 27.2 million euros (22.9m).

Shares, which have increased by 50 per cent in the past half-year, were down 2 per cent following the announcement.

Freddie George, an analyst at Seymour Pierce, said the group's overall figures were better than expected, but added there was likely to be disappointment at the performance of Comet.

"We continue to prefer Dixons Retail, where its recovery strategy is more proven and is delivering good profit uplift," he said.

Kesa refused to comment on rumours that private equity firm Knight Vinke, which has bought 8.8 per cent of the company's shares in recent months, might be willing to buy Comet.

The group's shares hit their highest point in two years after Knight Vinke started snapping up stock earlier this year.