Kesa Electricals has lost its spark

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UN PEU décevant was one French broker's verdict on annual results from Kesa Electricals yesterday. That's a tad disappointing, in the English.

UN PEU décevant was one French broker's verdict on annual results from Kesa Electricals yesterday. That's a tad disappointing, in the English.

Kesa owns Darty, the electrical goods retailer, and BUT, a furniture chain, in France. It also has Comet in the UK. Only Darty can be said to be performing particularly strongly, with a mundane performance by Comet and a downright awful one from BUT.

The company's shares - which have done very well since the demerger from Kingfisher back in 2003 - came off yesterday as the company admitted BUT's performance was below its expectations. The French furniture market has been weak, but some of BUT's rivals are doing all right and its own slide in profitability, by more than 15 per cent in the past year, appears to have more to do with its staid ranges. A "new senior management team" and an "action plan" were discussed yesterday, but analysts remain sceptical that any turnaround will be quick.

In electricals, on both sides of the channel, sales of MP3 players and flat screen televisions were significantly ahead, and there was also strong demand for laptops. The strength of the Darty brand is such that Kesa is expanding it into Italy, although this will cause some unexpected start-up losses in the current financial year. French consumer confidence remains subdued and is unlikely to turn up.

Worse, that is also increasingly the case in the UK - another black mark yesterday. Kesa warned that trading since the start of its new financial year had been "soft" and that Comet will continue to find things difficult this year. Electrical goods retailing is tough even at the best of times, since there is price deflation on just about every product range and more and more competition from the supermarkets. If falling consumer confidence means we are about to enter the worst of times, Kesa will be lucky to maintain decent profit growth. Avoid.

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