Rumours that European electricals retail group Kesa is looking to offload Comet, its UK arm, should come as no surprise according to leading industry analysts.
Over the last four months of its full-year trading period, ending April 30th 2011, Comet saw its sales plummet 15.2 per cent year-on-year, performing well below the rest of the group’s operations.
Kesa owns electricals retailers Darty, BCC and Menaje Del Hogar - based in France, Holland and Spain respectively - along with several other companies across the continent.
Sector analysts Verdict Research believe that with the UK consumer environment so though and its other companies producing positive results, Kesa would be wise to sell Comet.
Matt Piner, Senior Analyst at Verdict, commented: “With Comet consistently underperforming the rest of the Kesa group and having a much bleaker outlook, it is no surprise that Kesa may be looking to offload it and focus on its stronger assets.
“Darty France and Kesa’s other established European businesses have recorded strong performances and market share gains in recent updates. Kesa’s developing businesses have also shown progress, despite the challenging conditions in Spain.
“It is Comet which is proving the major drag on the group’s performance.”
The electricals sector in Britain has looked increasingly crowded since the arrival of US business Best Buy and the rise in online sales.
With major grocers and department stores like John Lewis improving their electricals offering, rival retailer Dixons has been forced to overhaul its stores to try and compete but Piner does not think that this approach would be worthwhile for Kesa.
“Unlike Darty and Kesa’s other businesses, which generally have a legacy of strong customer service and high profits, Comet is struggling to differentiate itself or improve margins,” Piner added.
“Therefore, rather than spend a disproportionate amount of time and money attempting to turn Comet around, Kesa is believed to be considering cutting its losses in order to re-invent itself as a smaller, Europe focussed, more profitable business.”