Subdued third quarter at KESA, Comet drags

KESA Electricals shareholders will be looking forward to February 3rd when the company finally offloads its struggling UK electrical retailer Comet, which had a tough Christmas.

Comet, which is no longer classed as a continuing group operation, saw third quarter sales drop by 15% and by 14.5% on a like-for-like (LFL) basis, as poor trading in the peak period between Boxing Day and the New Year offset an improving trend pre-Christmas.

While the disposal is expected to complete in two weeks' time, KESA has revealed that given the division's performance, net debt will exceed the agreed net debt threshold by up to £10-15m.

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As for continuing operations, third quarter total revenues rose by 0.3% in euros (+1.1% in local currency) but fell by 1.3% on a like-for-like basis as strong growth in multimedia was more than offset by a poor vision market. However, web-generated sales jumped by 18% and now account for over a tenth of product sales.

Weak market conditions and a less favourable product mix (with strong growth in multimedia) saw the gross margin fall by 90 basis points during the period between November 1st and January 8th.

Darty France saw revenues fall 2.2%, down 4.7% on a LFL basis, but the firm assured that this was still an outperformance in a weaker-than-expected market.

Other established businesses (BCC, Vanden Borre and Datart) performed well, with revenues up 10.9% in local currency, up 8.6% on a LFL basis. Developing businesses (Darty Spain, Darty Italy and Darty Turkey) saw revenues rise 4.8%, LFL sales up 1.7%.

"We will keep on building on the strength of our market leading cross channel offer whilst adjusting our cost to serve, in market conditions which we expect to remain challenging," the firm said.

Shares dropped 10.14% to 70p in morning trade, down from 77.9p at yesterday's close.