Kesa Electricals, the owner of the Comet electrical chain has today said that it expects its annual profit margin to fall after this year’s price cuts across the high street and warned that the “difficult economic environment” would continue.
Kesa announced that group like-for-like sales, which strip out gains from new stores opened during the reporting period, fell 5.5 per cent between November 1 and January 8. Group sales declined by 2.2 per cent.
Sales at Kesa’s Comet stores fell by 2.5 per cent over the period, and while Kesa said that trade after the Christmas period had picked up, it was not enough to arrest a decline in revenues at the UK business.
Kesa said that because market conditions in the UK continued to be “very aggressive”, and it now expects gross margins to fall by 170 basis points compared to last year.
Kesa added that like-for-like sales at its Darty electrical goods chain, which is mainly based in France, with additional outlets in Turkey, Italy and Switzerland, declined by 6.2 per cent, over the same period, while total revenues fell by 3.6 per cent.
However, the strong appreciation of the euro against the pound meant that Kesa, which is listed in London, actually recorded total revenue growth of 18.2 per cent revenue on Darty as its euro takings were converted into pounds.
Jean-Noel Labroue, the chief executive of Kesa, said: “As anticipated, the trading conditions across all our markets for our important peak period were very tough with further deterioration in Continental Europe.”
“We are expecting the difficult economic environment to continue and we will remain particularly focussed on maintaining our strong balance sheet.”