Kesa profits plunge as electricals retailer sees no let-up in the eurozone crisis

Shares in Kesa, which owns the market-leading Darty business in France, fell yesterday after it posted a 42 per cent fall in full-year profit and slashed its dividend.

“In France last year, the (electricals) market declined by around 4 per cent. We expect it to decline further this year, mainly due to vision [TV sales] but maybe not to a 4 per cent level,” chief executive Thierry Falque-Pierrotin said.

Kesa, which will change its name to Darty from July 31, had enjoyed a boost in TV sales in recent years, mainly because of soccer’s world cup in 2009/10 and as countries moved to digital broadcasting in its 2010/11 year.

“In Italy and Spain, the market declined double-digit [last year] and we still see it declining but maybe at a less dramatic level.” Analysts have said Kesa could dispose of its loss-making businesses in Italy, Spain and Turkey.

Mr Falque-Pierrotin said the focus was on delivering operational improvements in the three markets, developing synergies with Darty France and monitoring market changes.

However, chairman David Newlands, set to be succeeded by senior independent director Alan Parker in September, said: “I do not think in business you can ever say never.”

The CEO said a renewed focus on customer service, internet initiatives and operational efficiencies would enable Darty France to take profitable market share and grow sales in the current year despite the tough economic headwinds.

Electrical specialists such as Kesa and Europe’s top two – MediaMarkt Saturn and Dixons Retail – are battling competition from supermarket chains and internet retailers.

Dixons will publish full-year results today.

Kesa made an underlying pre- tax profit of 59 million euros in its 2011/12 year to end-April, in line with its guidance.

Kesa sold its loss-making British business Comet to private investment firm OpCapita for a nominal £2 in February.