Comet crashes to earth as Blacks looks to white knight

The high street is clearly in dire staits: not only has Kesa, Comet's owner, made a 9.2m euro loss, but Blacks shares have dropped 40%.

by Emma Haslett
Last Updated: 06 Nov 2012
An indication of just how tough conditions on the high street have become, after two of the UK’s most troubled retailers admitted today that their situations have become even worse. First up, Kesa, the French electrical retailer (and former Comet owner) which reported a half-year loss of €9.2m (£7.9m) for the six months to the end of October – which, compared with a profit of €32.4m during the same period last year, shows things aren’t looking good. Secondly, outdoor gear retailer Blacks, shares of which have just plummeted by 40% after it admitted it’s struggling to raise capital. Could this Christmas get any less merry?

Admittedly, most of Kesa’s losses are down to Comet, which it managed to flog to a private equity group last month (for £2. Usually these sorts of token acquisitions are £1, but we suppose this is inflation at work). But Comet still dragged down its balance sheet for this trading period: sales at the chain slumped by 18.6% in the six-month period, creating a pre-tax loss of €25.7m. Kesa also had exceptional charges of €133.6m to contend with - €109.9m of which was to do with the sale of Comet.

Group chairman David Newlands was, understandably, keen to point out that now Kesa has offloaded Comet, balance sheets should start to recover accordingly. And to be fair, excluding Comet, Kesa’s retail arm made a profit of €16.5m – although that’s still down more than half the €38.8m it made a year earlier. So a recovery will by no means be simple.

At least it found a buyer for Comet, though – that’s more than can be said for Blacks, which has issued an appeal for a ‘white knight’ investor to rescue it by buying up the firm (or one of its brands, at least). The firm said last month that the winter period has been something of a damp squib, and it expected sales over Christmas to be ‘weaker than expected’.

But the situation must be pretty desperate, given that the company, which has £36m of debt, has already persuaded the takeover panel to a) waive rules that would normally force a potential buyer to make an offer within 28 days and b) allow the buyer to remain anonymous. Management are apparently targeting a sale by January – although by the sounds of it, things aren’t looking hopeful.

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