Struggling electricals retailer Comet has today reported terrible Christmas trading which has pushed its level of debt far past what was anticipated when it was sold late last year.
In November Kesa Electricals sold Comet for just £2 to private investment firm OpCapita, with the deal set to be completed on February 3rd 2012, but Kesa now says that the net debt threshold set at the time of the deal is likely to be exceed by between £10 million and £15 million after weak festive sales.
Overall revenues at Comet in the period between November 1st 2011 and January 8th 2012 dropped 15 per cent year-on-year while like-for-like sales fell a shocking 14.5 per cent.
Gross margins improved during the quarter by 20 basis points but the peak clearance sales period saw poor trading and perhaps most tellingly of all its web-generated sales, which are growing strongly at other business across the industry, remained flat at this most important time of year.
Matt Piner, Lead Consultant at retail analyst group Conlumino, described the trading performance as “nothing short of disastrous” and warned that the retailer’s new owners take control of the business with many problems to deal with.
“What with the problems securing credit insurance and the legal issues with Microsoft, further obstacles continue to mount up in front of new owners OpCapita and it must at some level be doubting the wisdom of this investment.”
Comet’s problems were made worse earlier this month when global software company Microsoft announced that it was bringing a legal case against the trader amid accusations of piracy.
Microsoft alleges that Comet made and sold over 94,000 sets of counterfeit Windows Vista and Windows XP recovery CDs, a claim Comet strongly denies.