Enlarge imageBy Mark Potter
LONDON (Reuters) - Kesa Electricals Plc
Kesa shares fell as much as 5 percent in early trading after the owner of Darty stores in France and Comet in the UK said like-for-like sales fell 0.7 percent from February 1 to July 18 amid a slowdown at all of its main businesses from the first quarter.
"Trading has got significantly weaker," analysts at brokers Numis Securities wrote in a research note, adding they planned to cut their full-year pretax profit forecast of 193.3 million pounds.
Retailers across Britain are struggling as debt-laden shoppers curb spending after interest rate hikes and amid stagnating house prices. French consumers are also tightening purse strings amid stubbornly high unemployment.
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Official data on Thursday showed a weaker-than-expected 0.5 percent rise in French household spending in June, but a surprise 1.3 percent jump in UK spending for the same month, though the quarter-on-quarter rise was a more modest 0.7 percent.
"The group’s performance in the period reflects the deteriorating retail conditions across our markets," Kesa Chief Executive Jean-Noel Labroue said in a statement.
"Anticipating that the difficult market conditions will continue, our businesses are working hard to manage margins and streamline their organisations in preparation for our important second half," he added.
Kesa, which makes about three-quarters of its operating profit in France, said like-for-like sales at French market leader Darty rose 1.8 percent in the period to July 18, slowing from 3.6 percent growth in the first quarter.
Profitability was also down, as sales were strongest among low-margin products such as flat-screen TVs and MP3 players and weaker among higher margin fridges and freezers.
Like-for-like sales at Comet, Britain’s second-biggest speciality electricals retailer, were down 5 percent, accelerating a first-quarter drop of 2.2 percent.
"It looks disappointing, particularly the decline in profitability at Darty," said Nick Bubb, an industry analyst at Evolution Securities, noting that solid demand in France had previously been offsetting weak trading in the UK.
At 0900 GMT, Kesa shares were down 3.4 percent at 259 pence, off an early low of 254p and valuing the business at about 1.4 billion pounds. The shares trade at
around 11.4 times forecast earnings for this financial year, below rivals Dixons
Like-for-like sales at French furniture chain BUT were up 3.1 percent, compared with a 4.8 percent rise in the first-quarter, Kesa said in a trading update.
Total sales, including new selling space, were up 2.3 percent in local currency terms and up 3.8 percent in sterling.
