Published on 19 - January - 2011
Tough market and big freeze hit Comet salesComet parent Kesa Electrical reports slowdown in trading, as like-for-like sales fall 4% over Christmas period.
Comet's sales were hit by heavy discounting in the market and snow in run up to Christmas
While total revenue for the group was up 0.4% for the period between November 1, 2010 to January 18, 2011, like-for-like figures dropped 4%, reflecting difficult market conditions, said the firm.
Comet saw a 6.5% decline in total sales - down 7.3% on a like-for-like basis. Kesa explained that the UK electrical chain delivered record trading from Boxing Day through to the New Year weekend but that the strong performance "failed to offset the weaker sales seen early in December due to competitive trading and adverse weather conditions".
Kesa has estimated that the weather conditions had an overall adverse impact on sales of 2%, with snow and ice in the UK, France, the Netherlands and Belgium in the lead up to Christmas. Gross margin declined 140 basis points, as the chain ramped up promotions to compete during the period.
The VAT increase has also had an impact, with sales trends softening since its introduction on January 4, 2011. In light of the latest figures, Kesa said it now anticipates a "small retail loss" for the year.
Kesa's French operation, electrical chain Darty gave a better performance, reporting a 0.4% grow thin total sales and a decline of 1.8% in like-for-like terms.
Online sales across the group were up by more than 11%, representing nearly 11% of total product sales in the period. Web-generated sales at Comet were up by just 3%, hampered, said the company, by disruptions during the introduction of a new software platform.
Kesa chief executive Thierry Falque-Pierrotin said: "Against a background of increased competitiveness, Darty France and other established businesses delivered a robust performance, offset by softer trading at Comet and the developing businesses. The group gross margin rate was in line with last year, and the benefit of our cross channel sales strategy was further demonstrated by the 11% growth in web-generated sales."
He added: "We remain confident in our strategy and committed to our plans to implement the Darty concept in all our markets and we have put in place a number of additional measures to improve revenue and reduce costs."
Kesa Electrical also signed a committed €455, five-year revolving credit facility, replacing its existing €500m facility. The new facility is expected to reduce the interest charge for the current financial year by around €0.5m and by around €3m in subsequent years.
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