Retailer Comet shines for Kesa

A STUNNING performance from electrical goods chain Comet has helped boost the performance of its parent company Kesa.

Kesa, which has more than 600 outlets in seven European countries, said Comet, number two in the UK market behind Dixons, overcame fierce price competition to help group earnings in the six months to 31 July. Profits before exceptional items improved by 3.6% to £54.7m.

Comet's 250 stores saw turnover rise by 7% to £637.7m, helping profits leap from £1m last year to £5.9m.

The company said changes to Comet's mix of products, coupled with tight cost controls, had allowed the retailer to face off competition from 'mass merchandisers', particularly on digital products. Comet also saw strong demand for multi-media items, flat-screen televisions, and digital radios.

Kesa, formerly a division of B&Q business Kingfisher, said it gained share in all its electrical markets, although its continental furniture retailer BUT was a drag on profits.

Kesa described trading in August and the early part of September as variable but added there had been an improved trend since then as the company prepares for the all-important Christmas trading season.

'Whilst it is too early to predict trading during the peak Christmas period, we are confident that the Group is well placed to deliver a satisfactory second half performance,' said Jean-Noel Labroue, chief executive.

The interim dividend was increased 10% to 2 3/4p a share.

Investment bank Citigroup kept its 'hold' rating on the stock and a 280p price target, warning Kesa's 'better-than-expected' rising sales trends are 'unsustainable' in the face of toughening sales comparatives.

Broker Cazenove meanwhile repeated its 'underperform' rating, saying the group's performance in retail was worse than it expected, especially for Darty and BUT.

Kesa shares slipped 1 1/2p to 287 1/4p in early trading.