Kesa defers share buy-back and predicts 'unstable market'

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The Independent Online

Shares in Kesa Electricals, which owns Comet, tumbled to their lowest for five years after it warned about tough trading conditions and deferred its share buy-back programme.

The electricals group's share price tumbled by 16.75p, or 9.6 per cent, to 157.75p – its lowest price since the demerger from Kingfisher in 2003.

The fall in the share price came after Kesa, which owns the Darty electronics stores in France, posted a 2 per cent increase in pro forma pre-tax profits to £128.8m for the 12 months to 30 April.

Kesa Electricals' chief executive, Jean-Noel Labroue, warned that trading conditions had deteriorated since April. He said: "We are seeing a continuing decline in consumer confidence and we anticipate further difficult trading conditions ahead."

Mr Labroue said the consumer outlook in France was "a little bit better than in the UK".

He said: "It's clear that that general mood in very negative in this country particularly. I cannot see positive trading for us until the year-end."

Like-for-like sales at Comet rose by 0.3 per cent for the three months to 30 April, but Mr Labroue said they had fallen into negative territory for the last six weeks of the period. He said: "Reality is beginning to bite."

In particular, Comet has suffered a decline in sales of white goods, such as washing machines, which are closely linked to the declining UK property market. Comet's managing director, Hugh Harvey, said: "It's a very unstable market and unstable markets are difficult to read." However, Mr Harvey said that sales of laptops had grown over its most recent quarter.

Kesa's chairman, David Newlands, said that the group was keeping its options open regarding share buy backs. He said: "We want to remain flexibility and maintain a strong balance sheet."

Mr Newlands added that it would have to weigh up the merits of a share buy-back programme against other opportunities, such as investing in its businesses in Italy and Spain.

When Kesa sold its French furniture chain BUT in February, it said it would use a proportion of the shares to buy back shares.

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