Comet shocks with profit warning

ELECTRICALS group Kesa shocked the City today as it warned of a sharp downturn in trading at its flagship UK retail chain Comet. The company, formerly part of Kingfisher, said that trading at Comet had got noticeably worse in April after a slight drop in the first three months of the year.

Turnover at Comet fell by 1.6% in the three months to 30 April but was down 2.2% on a like-for-like basis. Sales of white goods, such as fridges, were particularly poor and this significantly affected margins, though sales of digital products like state-of-the-art cameras continued to be good.

Comet is now expected to make a small loss in the first half of the year. Its woes are further evidence of a growing problem on the High Street. Other retailers, notably Boots and WH Smith, have reported a similar downturn.

As well as the increased competition on the High Street, Comet and other electrical goods retailers are being hit by internet retailers.

Many consumers visit Comet and other stores groups to check out particular products to help them make up their minds. They then purchase the goods on the internet, where prices can be as much as 15%-20% cheaper.

Chief executive Jean-Noel Labroue said Kesa's French electrical retailer Darty and its other continental European businesses had achieved satisfactory sales in the quarter.

But he added: 'Comet's performance in the first quarter reflects the difficult market conditions in the UK. The company has already reduced its cost base and will take further action if these conditions persist.'

Comet has 250 stores and in the three month period reported sales of £316.7m, down 1.6%. Darty, meanwhile, was 8.1% ahead at £340.9m.