High street slowdown pushes Comet owner into red |
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Fri, 30 Sep 2005 00:35
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LONDON: With consumers continuing to tighten their belts and fewer houses moving on the property market, it’s easy to understand how Kesa Electricals plunged in the red. The Anglo-French retailer of electrical appliances yesterday reported a 38 percent decline in first-half profits.
The half-year performance was greatly hurt by losses at its Comet chain of stores in the UK. Comet reported a sharp downturn from profits of £4.4m in first-half last year to a loss of £3.3m. Sales were down 2.2 percent across the chain’s 250 stores. Comparable sales dropped 4.8 percent to £623.7m.
Strong demand for flat-screen TVs and MP3 players did not help the overall sale of goods such as dishwashers, cookers, fridges, etc. The decline in these high-margin white goods dragged pre-tax profits down from £37.3m to £23.1m.
The store had been swift to respond to market conditions by modernising its stores and revamping its brand image.
With the current gloom in the market, the group appears least hopeful of a turnaround in the near future. Chief executive Jean-Noel Labroue said the first weeks of the third quarter were marked by similarly tough conditions – consumers seeming disinclined to spend on the big-ticket goods.
Bearing this in mind, the retailer planned to continue its cost control efforts to maintain margins and minimise the impact on the group’s profitability. The group also owns the ‘Darty’ chain of consumer-electronics stores and ‘BUT’ a furniture & white goods store, both in France. Business at Darty had also been on a relative downslide, taking retail profit from £37.6m to £35.8m. However, BUT performed better with profits rising from £15.8m to £16.1m.
Retail business in the UK had been hit by the worst consumer slowdown seen in many years. In an effort to reverse the scenario the Bank of England had last month cut base lending rate by 0.25 percent. The Bank’s MPC meets again next week to deliberate whether a cut or a freezing of interest rate is required this time round.
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