Consumer fears take their toll on Kesa

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Kesa, Europe’s number three electrical retailer, said sales declines worsened in its fourth quarter as consumers fretted about fallout from the eurozone debt crisis and its core French business came up against tough digital switchover comparisons.

It said sales at stores open over a year fell 5.9 per cent in the 16 weeks to April 30 period, which includes its fiscal fourth quarter, and gross margin declined 100 basis points.

That compares with analysts’ consensus estimate for a 5.3 per cent like-for-like sales fall and a decline of 1.3 per cent in the 10 weeks to January 8.

Kesa said the group would, however, make an underlying pre-tax profit for 2011/12 around the mid-point of analysts’ range of 53-64 million euros.

“Trading conditions have been volatile and have remained weak in most of our markets, particularly in vision (TVs) and in Italy and Spain,” said chief executive Thierry Falque-Pierrotin.

Like-for-like sales at the firm’s market-leading Darty France stores open over a year slumped 10.0 per cent, having been down 4.7 per cent in the third quarter.

Mr Falque-Pierrotin said the double-digit decline was “a one-off”, reflecting an over 30 per cent slump in television sales against a spike in demand last year when the greater Paris region switched off analogue broadcasts, requiring consumers with older sets to buy new digital ones.

Electrical specialists such as Kesa and MediaMarkt Saturn and Dixons Retail are battling cut price competition from supermarket chains as well as internet retail-ers.