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Last Updated: Wednesday, 22 March 2006, 08:45 GMT
Profits slide at Comet owner Kesa
Flat screen TVs on sale in Kesa store
The World Cup is expected to boost demand for flat screen TVs
Profits have continued to decline at Comet-owner Kesa, despite rising demand for hi-tech gadgets.

Pre-tax profits dropped by almost a fifth, 19.4%, in the year to 31 January to 143.3m ($251m).

Kesa blamed "very tough" UK trading conditions for the slide, with Comet's like-for-like turnover down 3.6%.

Sales of digital goods and flat-screen TVs rose, but sales of "white goods" such as washing machines and fridges were "consistently weak" across Europe.

The news comes almost a week after the group rebuffed a 1.72bn takeover offer from an unidentified private equity consortium.

"Despite tough trading conditions in our core markets, the group delivered positive sales growth," said chief executive Jean Noel Labroue.

European growth

Kesa performed well in the rest of Europe, with its Darty outlets in France managing to deliver growth in all areas except mobile phones.

Meanwhile, turnover at its other businesses - including Darty Italy and Switzerland - rose by 3.8% on a like-for-like basis, which strips out the effect of new store openings.

Turkey has significant economic growth potential and is at the very early stages of market consolidation
Kesa

Despite rising sales, profits fell 7.3% and 17.6% at its BUT furniture and electricals chain, but these falls were eclipsed by a 21.4% slump in profits at Kesa's Comet outlets.

Looking ahead, Europe's third-largest electricals retailer said growth in sales of MP3 players and DVDs was likely to continue, adding that it expected the World Cup to increase demand for flat-screen televisions into the summer.

However, it did warn that white goods sales would remain weak, although there were signs of a pick-up in France. Kesa added that "fragile consumer confidence" would continue for some time.

Expansion

Kesa also announced plans to break into the Turkish market, opening five stores under the Darty name across the Istanbul region by the end of 2007.

"Turkey has significant economic growth potential and is at the very early stages of market consolidation," the firm said, explaining its decision.

The country appears to be becoming popular with retailers hoping to expand their businesses, with Kingfisher - owner of DIY chain B&Q - recently outlining plans to move there.

Shares in the group slipped by 3 pence to 322p in early trade on the London market.


SEE ALSO:
Comet owner cautious on profits
19 Jan 06 |  Business
Comet losses hit parent firm Kesa
28 Sep 05 |  Business
Comet stores heading for losses
25 May 05 |  Business
Sales spark at Comet owner Kesa
26 May 04 |  Business


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