Comet profit warning shocks investors
Thursday 11 September 2008
The retail sector is continuing to suffer at the hands of the housing market slowdown with the Comet electrical goods chain warning yesterday that it is heading for a loss because of disappointing sales of refrigerators and washing machines.
The company, part of the pan-European Kesa Electricals giant, believes that people are unable to move home and are not splashing out on new household appliances. Comet is also suffering because more people are shopping online.
The scale of the setback during the three months of the year to the end of July surprised analysts. Sales at the chain of 251 stores fell by a thumping 9.9 per cent. This is far worse than the rival electrical chain Currys, which has reported sales 7 per cent lower.
The company defended its position and said it had protected margins by refusing to slash prices to draw buyers into its stores. "One day the cycle will tick up – in the meantime the business is refusing to chase unprofitable revenue," said an adviser. Sales of laptops and televisions were more resilient, although the company admitted "we now anticipate Comet will make a loss in the first half".
Kesa's arguments did not satisfy the stock market, which marked its shares down by nearly 10 per cent. Analysts slashed profit forecasts for the current year. Overall, Kesa, which takes in the French electrical chain Darty and other retail outlets operating throughout Belgium, Holland and Slovakia, reported a 4.7 fall in sales for the opening quarter. Darty fared better than Comet with sales down by 3.2 per cent, but conditions in France remain tough and the scale of the slowdown also caused concern in the market.
Nevertheless, the chain remains on the lookout for suitable acquisitions. Darty had 150,000 subscribers at the end of July for its Darty Box, a combined internet, digital-television and telephone package and is hoping to sign up another 100,000 customers by next April.
Jean-Noel Labroue, the chief executive, said: "We are still in the middle of the storm. Trading conditions across all our markets deteriorated particularly in the UK and have not changed since the period end.
"As we did not expect to see any improvement in the short term, we put in place a robust action plan to protect margins, adjust costs and generate cash."
Elsewhere, Kesa's newer ventures in Spain proved disappointing, "reflecting very poor market conditions".
Stock analysts at Landsbanki warned: "Growth of the internet channel looks likely to create major problems threatening both market share and margins."
The concern was shared by the broker Citi, which said the deterioration across the group "should surprise the market on the downside". It expects a fall of 10-15 per cent in profits for the year to £115m-£120m. The shares finished 15.5p lower at 142.5p.
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
Company reveals $542m investment in start-up building 'a rocket ship for the mind'
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 4 The inventor of the Facebook 'like' button says he never made a 'dislike' button because he feared the 'unfortunate consequences'
- 5 Russell Brand threatened with arrest after filming outside Fox News headquarters
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Oscar de la Renta dead: Legendary US fashion designer dies after long cancer battle aged 82
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
Lord Freud hangs on as MPs of all parties 'call for his head' over disability comments
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...