Toughing it out
Kesa, the pan-European group that owns electrical retailer Comet in the UK, has revealed group profits of £13 million for the half year ending 31st October, but that Comet itself lost £8.1 million in the same period.
Comet's loss compares to a profit of £10.6 for the same period last year. Revenue was £723.3, which was £62.1 (7.9 percent) down on the half-year before. The fact that Kesa managed a profit at all was down to its French electrical retailer - Darty - as none of its other operations seem to have made a profit either.
Kesa chief exec, Jean-Noel Labroue, said: "The economic climate across Europe has created very tough trading conditions for all our businesses, particularly in the UK and Spain. I am satisfied that our strict focus on cash management, stock and capital expenditure, along with margin management and cost control, has allowed us to maintain a strong balance sheet.
"This will remain a priority for the Group and will help us manage the business through what will be a very difficult peak trading period as we do not expect consumer confidence to improve for the rest of the financial year."
Here's what the Kesa trading statement had to say about Comet:
The very aggressive market conditions impacted gross margin, down 100 basis points, and as anticipated Comet made a loss over the period. This was limited to £8.1 million due to strong actions on costs which reduced year on year as a result of variable cost reductions, streamlining store and head office staffing levels and rationalising the logistics structure with the closure of two home delivery platforms and the relocation of the regional distribution centre in Harlow. All these cost actions will benefit the second half.
Comet also continued to deliver positive operating cashflow after capital expenditure and this remains a key priority for the business.
Investment in Comet's in-store and after-sales service proposition was maintained with extended customer service offers and additional staff training courses undertaken.
The continued success of the stores with trading mezzanine floors, particularly in optimising overall rent efficiencies, led to Comet further investing in this format. Eight stores were converted and one new store opened in the first half, bringing the current total to 32, and one refurbishment was completed. In the second half of the year four stores will be converted to the mezzanine format.
