Electronics retailer Kesa mulls sale of British unit

22nd June 2011, Comments 0 comments

Kesa Electricals may decide to sell its loss-making British retail arm Comet, whose "unsatisfactory and unacceptable" performance has offset growth in France, Kesa's chairman said on Wednesday.

The announcement by David Newlands, in a conference call with reporters, came after the electrical retailer announced that annual profits dropped 29 percent to around 32 million euros and said it was closing a number of stores in Britain.

Kesa, which also owns the Darty retail chain in France, said net profit stood at 31.8 million euros ($45.7 million) in the 12 months to April 30, compared with profit after tax of 44.6 million euros in 2009-10.

Group revenue increased 2.2 percent to 5.917 billion euros, as a rise in income at Darty stores offset a fall for Comet.

Kesa said it was closing 17 Comet stores over the next three years, as Britons curb spending amid their country's weak economic recovery.

"We have a strong turnaround plan for Comet to restore its profitability in the medium term and in parallel we are examining strategic alternatives to ensure the best overall value for shareholders," Kesa chairman Newlands said in the earnings statement.

Later he told reporters that the Comet results were "unsatisfactory and unacceptable" and that all corporate options are being explored, which could include a sale or a joint venture.

Kesa's share price soared 7.54 percent to 144 pence on London's second tier FTSE 250 index following Newlands' comments.

"The company is... in a difficult place, comprising two main businesses whose fortunes are near opposite," said Richard J Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

"Not surprisingly, therefore, the shares have had a confusing ride of late. Whilst speculation of a Comet divestment have driven the shares up four percent over the last three months, over the last six months Kesa has lost 17 percent."

-- Dow Jones Newswires contributed to this story --

© 2011 AFP

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