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Comet stores to close this year, warns Kesa

By This Is Money
Updated: 06:19 EDT, 11 May 2011

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Redundancies are imminent at Comet as owner Kesa Electricals expects to close up to ten stores this year after suffering another slide in UK sales.

Comet owner Kesa cannot see an end to the sales downturn

Tough year: Kesa said it expects to cut 150 UK staff

The retailer, which has 248 outlets in the UK, will also shut one of its three warehouses and axe 12 of its 14 regional service centres, which are used as a base by its engineers who repair and service its products.

With Comet closing between five and 10 stores by 2012, Kesa said it expects to cut 150 UK staff, including 40 recent job losses at Comet's head offices in Hull and Rickmansworth in Hertfordshire.

Difficult market conditions following January's increase in VAT to 20% have seen same-store sales at Comet dive 15.2% in the 12 weeks to April 30. They are down 7.7% over the past year, while online sales in the UK reduced by 8%.

Kesa warned earlier this year that Comet will make a loss this year after trade was disrupted by snow in the run-up to Christmas, and Kate Calvert, an analyst at Seymour Pierce stockbrokers, described the latest UK sales performance as 'shocking'.

The company said it was likely that the warehouse to close would be in Corby, Northamptonshire, although this is subject to consultation.

Kesa's business in France, where it trades as Darty, saw a 5% rise in same-store sales in the final quarter of the financial year but this was offset by struggling markets such as the UK and Spain.

Overall like-for-like sales were down 3.1% in the period, which was slightly better than the City's expectations of a fall of 5%.

Shares rose 0.9p (0.7%) in early trading to 138.2p as traders reacted to the smaller than expected sales slump and the restructuring plans.

But David Jeary, an analyst at Investec, said: 'There is little to cheer in our view in the latest trading update.

'For those of an optimistic bent, the proposed restructuring costs are set to deliver a meaningful level of cost savings - in the case of Comet and Spain, they urgently need to.

'We believe Kesa has arguably been tardy in addressing the cost- base issue.'

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