Comet sale talk boosts rival electrical retailers

A POTENTIAL shake-up in the beleaguered UK electrical retailing sector sparked a surge in the share prices of two of its biggest players yesterday.

The rally followed reports that Comet owner Kesa is considering whether to dispose of the UK electrical goods chain, a move which could provide a boost to the prospects of rivals such as Dixons and Argos owner Home Retail.

Dixons shares jumped nearly 14 per cent on hopes of less competition in a tough market, while the rumoured plan also met with approval among Kesa investors as shares rose 7 per cent.

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A disposal would enable Kesa to focus on Darty, its profitable French business, and for its shares to trade only in Paris.

Kesa's management and activist investor Knight Vinke, which owns 18 per cent, are said to want to deal once and for all with the problems at Comet.

Analysts say the chain is holding back a re-rating of the Kesa share price on the back of the success of its French business Darty.

Comet, which has 250 stores, is losing money and struggling to boost revenues in the face of falling consumer confidence and squeezed incomes. A three-year recovery plan launched last year has failed to halt its decline and revenues fell 13.7 per cent in the three months to April.