Kesa which is Europe’s No. 3 electricals retailer, beat forecasts with a 52% rise in first-half profit and said it was well positioned for the crucial Christmas trading period.
“We have prepared all our businesses for what we expect to be a competitive peak trading period and will continue to implement self help measures in order to face an increasingly uncertain market environment,” said Chief Executive Thierry Falque-Pierrotin.
Kesa, which owns market leader Darty in France and British No. 2 Comet, said on Wednesday it made an underlying pretax profit of 25 million euros ($33.04 million) for the six months to October 31.
That compares with analysts’ forecasts of 22 million to 25 million euros and 16.4 million euros made in the same period last year.
Revenue increased 4.1 percent to 2.78 billion euros, with sales at stores open over a year up 0.1 percent.
The firm, which ended the half with net cash of 109.5 million euros, is paying an interim dividend of 2.25 cents, up 15 percent.
Shares in Kesa have jumped over 40 percent since late June when activist investor Knight Vinke’s first disclosure of an interest in the retailer prompted speculation of a private equity break-up bid.
Knight Vinke currently has direct and indirect ownership of 10.02 percent of Kesa, making it the second largest shareholder.
Knight Vinke, the activist US shareholder, has been building a stake in Kesa over recent months, sparking talk in the market that Kesa could be split up. Which seems to grow stronger and the rumours of such a move persist despite denials from Kesa.
On Wednesday Thierry Falque-Pierrotin, chief executive, said Kesa’s relationship with Knight Vinke was “normal”.
At Comet, retail losses were €6.4m compared to losses of €1.8m last year. Like-for-like sales fell by 3.7pc at the chain. By contrast, Darty’s retail profit was €59.8m compared to €51.4m last year. Like-for-like sales rose by 2.2pc.
Philip Dorgan, analyst at broker Altium Securities, said that there is value in the company that could be realised under management’s current plans. However, he added: “There is also a decent argument that its current group structure makes little sense.”
From what we can gather Knight Vinke is highly unlikely to endure the losses and try to force a restructure of the business which, for now, would seem to very strongly point at selling off the Comet side of the business. And, given that there is a possible suitor waiting in the wings with a pot of cash to blow, Best Buy, now may just be a very opportune moment to try to flog off a large electrical retailer in the UK.