Hefty losses at Comet spark fresh talk of sale by owner Kesa

LOSSES at electrical goods chain Comet have fuelled speculation of a break-up of Kesa, which reported strong trading in its other divisions.

The group posted a 52 per cent rise in first-half profits led by strong sales at Darty, France's leading electrical chain. However, losses at Comet rose three-fold during the six months to the end of October.

Kesa's management team, led by chief executive Thierry Falque-Pierrotin, played down the prospect of selling off Comet even though its fortunes have contrasted sharply with the rest of the group. Talk of a break-up has been rumbling since June, when activist investor Knight Vinke of the US appeared on Kesa's shareholder register.

"We'd never comment on market rumour," Falque-Pierrotin said yesterday. He added that Kesa had a "normal" relationship with Knight Vinke, the asset management firm that is now the group's second-largest shareholder with direct or indirect control over a stake of more than 10 per cent.

Pre-tax profits at Kesa, which trades in ten countries, rose nearly three-fold to €27.2 million (22.9m) on overall revenues of €2.78bn. Losses at Comet, which accounts for about a quarter of group sales, rose to €6.4m on sales that were 2.6 per cent lower at 726.6m.

Comet is the UK's second- largest electrical retailer after Currys, trading from 249 shops. It is facing increased competition from supermarkets, US giant Best Buy's entrance into the UK and the resurgence of Dixons Retail, the group that owns Currys and PC World.

Earlier this year, Kesa launched a three-year recovery plan for Comet involving store refits and a sharper pricing policy. The chain is also shifting its focus to include more kitchen and beauty products. Comet's online sales rose 8 per cent in the first half and now account to 14.6 per cent of revenues, helped by its revamped website and a larger online product offering.