Comet about to crash to earth?

The electricals retailer has reported 22% drop in revenues over the last three months. That's going to leave more than a crater.

by Emma Haslett
Last Updated: 06 Nov 2012
It’s not like it’s unexpected, but electricals retailer Comet came to earth with a bang this morning, after its parent company, Kesa, published results showing revenues have plummeted by 22% over the past three months. That’s following the 6.8% fall in sales it posted back in June. While it’s probably not altogether Comet’s fault – after all, the economic conditions aren’t exactly conducive to a white goods-buying frenzy – it’s no surprise that Kesa says it’s exploring ‘strategic alternatives’ for the retailer. In other words, it’s looking for a buyer.

Kesa pointed out that, after last year’s World Cup caused something of a widescreen fever among consumers, sales this summer were always going to look a bit flat by comparison. And it doesn’t help that trading also slumped at its non-UK businesses: revenues at Darty, its French flagship business, dropped by 2.6% compared with a year ago, while revenues also fell in its other markets. Although Kesa did point out that it had had seen market gains in ‘France, Belgium and Turkey’ – even if they weren’t quite enough to push up those revenues.

So is this the end of the line for Comet? Kesa hasn’t been very explicit about what those ‘strategic alternatives’ for its UK business are, but it’s widely believed that, while it might not be able to find a buyer with financials in the state they’re in, it’ll be on the hunt very shortly – and will have decided on Comet’s fate by Christmas. In the meantime, Kesa says its turnaround plan for the business is ‘delivering results’ – which might not be obvious to the untrained eye, but apparently a ‘shift towards more profitable products’ has pushed up gross profit margins by 0.8% of revenues. So we can but hope.

On a slightly brighter note, the owner of B&Q and Screwfix has announced that it’s planning to create 1,200 jobs this year. Kingfisher has apparently decided to take on 230 staff at 29 former Focus DIY stores (another casualty of low consumer confidence), while it’s going to create 1,000 jobs at Screwfix, which supplies trade tools. Having published results showing pre-tax profits rose by almost a quarter to £439m in the six months to the end of July, it added that it’s expecting to invest £130m in the UK this year – four times the figure of the previous year. Which just goes to show that if the proposition’s right, businesses in even the most beleaguered of industries don’t necessarily have to suffer.
Finance Retail

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