Comet owner Kesa sees no sign of retail recovery

Kesa, the retail chain that owns Comet in the UK, has warned that it sees no signs of recovery after plunging £81m into the red last year.

Chief executive Thierry Falque-Pierrotin predicted that the company faces "another difficult year", as it cut its dividend as part of a cash-saving drive.

"We haven't seen any recovery in the market," said Falque-Pierrotin, in a further blow to hopes that the retail sector might be seeing some green shoots.

Kesa has already cut 300 jobs in the UK, 200 at its Hertfordshire headquarters and 100 across Comet's stores. Falque-Pierrotin said he did not expect to make further cuts this year, despite Comet's profits falling by over 75%.

Sales at Comet in the 12 months to 30 April fell by 4.7% to £1.66bn, with profits sliding to £10.1m from £43m a year ago. Falque-Pierrotin said that white goods had sold particularly well, but that televisions had come under heavy pricing pressure.

Kesa as a whole made an £81m loss, compared with a £128.8m profit a year ago, mainly caused by a £118.5m writedown on its Spanish arm, where 20 stores are closing.

DSG, the former Dixons group which runs Currys and PC World, will give a further insight into the state of the UK electricals market tomorrow when it reports earnings. Analysts expect DSG to report a loss for the last year, as it has spent millions of pounds closing under-performing stores.

Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers, was encouraged that Kesa is cutting costs and focusing on cash generation.

"On the downside, trading remains challenging given hard pressed consumers, current arch rival DSG International is continuing the rollout of its revamped stores, whilst competition is set to intensify even further as North America's Best Buy prepares to establish a UK operation," he warned.

Shareholders will receive a total dividend of 5p for the last financial year, down from 14p a year ago. Shares in Kesa rose 1.25p this morning to 104p.