Retail group Kesa Electricals has today admitted that it is assessing ‘strategic alternatives’ for its ailing UK subsidary Comet, which reported a €10.3 million (£9.1 million) loss for it full-year period.
Sales at Comet in the 12 months ending April 30th 2011 declined 6.8 per cent in constant currencies compared to the previous year, whilst revenues at the wider Kesa group rose 0.7 per cent with currency changes and 2.2 per cent in total.
Kesa’s main Darty business in France posted profit growth of 11.9 per cent during the period but due to the struggles at Comet and other European operations the group’s profit before tax was down 22 per cent.
David Newlands, Chairman of Kesa, said: “We have a strong turnaround plan for Comet to restore its profitability in the medium term and in parallel we are examining strategic alternatives to ensure the best overall value for shareholders.”
It was confirmed today that of the 249 current Comet stores 17 will be closed or exited in the next three years, whilst nine others will be right sized and seven will be retained and refurbished.
Speculation will now grow that Kesa will look to offload Comet if a buyer comes in at the right price, though the recent difficulties of retailers such as Best Buy UK and Dixons makes plain to any suitor how difficult the market currently is.
Comet managed a retail profit of €12.4 million 2010, showing how steep its decline has been, and in local currencies this year it recorded a loss of £8.9 million.
Margins fell 0.6 per cent in the year and the retailer admits that it has lost market share to competitors as it attempts to restructure the business.
Kesa is pleased that in an increasingly multichannel environment online sales now make up 15 per cent of overall product revenues at Comet, and the group has also conducted a refit campaign at 44 core stores, changed its product mix and launched a new advertising campaign in the last 12 months.
Thierry Falque-Pierrotin, CEO of Kesa, commented: “We anticipate all our markets will be challenging for the current financial year, particularly in the first half against the World Cup comparatives of last year.
“However from improved market positions in most of our markets, further cost measures in all countries with specific restructuring at Comet, BCC and Darty Spain and the strength of our cash generation and balance sheet, we are well prepared for these conditions.
“We remain focused on delivering our strategic plan - further rolling out our specialist business model and improving profitability across the group.”