Comet, the electricals retailer, missed out on the Christmas cheer enjoyed elsewhere on the high street as it lost market share amid declining sales.
Sales at the chain, owned by Kesa, fell 3.4 per cent or 3.9 per cent excluding takings from new stores, between November 1 and January 8. By contrast, Darty France, Kesa’s larger and more profitable French business, posted a sales increase of 4.6 per cent, or 3.6 per cent on a like-for-like basis.
Comet’s performance also contrasts with booming Christmas sales at DSG International, owner of rival Currys and PC World, and John Lewis’s electricals division. DSG’s sales of electricals in Britain rose 8 per cent during an overlapping period on a like-for-like basis, while John Lewis’s total sales were up by between 13 and 15 per cent over a comparable period.
Thierry Falque-Pierrotin, Kesa’s chief executive, said: “Comet did report a strong outperformance of the market for last Christmas. It’s difficult to do it twice, that’s why the market expected us to see a decline in sales figures. If you look at it on a two-year view, Comet is maintaining market share.”
Profit margins fell by 0.5 percentage points, partly because it was forced to cut prices to improve sales.
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Mr Falque-Pierrotin said that Kesa had held market share in Britain over a two year period. However, analysts said it has underperformed DSG even on the two-year basis.
He added that the depth of the recession in Britain had also been a factor in dampening trade. France emerged from technical recession last year.
Kesa’s difficulties in Britain illustrate the cut-throat nature of the UK electricals market. Analysts say that electrical retailers’ profit margins are under pressure because a relatively high proportion of sales are carried out online in Britain, allowing customers to compare prices or to buy from cheaper online operators, while depriving the retailer of the chance to push state-of-the-art high-margin items.
Mr Falque-Pierrotin insisted that Kesa’s emphasis on service and a more sophisticated e-retail operation — allowing customers to order at home and pick up in store, or order in a store and have delivered to the home — would protect it from the threat of the internet in the long run.
He said: “Our model today is having a cross-channel approach between stores and the internet, so we’re seeing the internet as a real opportunity, not a threat — even on margin.
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“When we develop internet sales, we do it with at least the same profitability as we can in stores. There’s no risk to the business model when we develop our internet sales.”
The company is hoping that this summer’s football World Cup will encourage consumers to buy new televisions.
Overall, sales at Kesa rose 1.3 per cent, down 0.3 per cent in a like-for-like basis, excluding foreign exchange movements. Its “developing” markets — Spain, Turkey and Italy — posted sales growth of 7.8 per cent.
Shares in the company fell 6.3p or 4 per cent to 139.4p.
Kesa, which was spun off from Kingfisher in 2003, is the third largest electricals retailer in Britain, with a market share of 8.2 per cent, behind DSG and Argos, according to Verdict, the consultancy.
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Analysts at Credit Suisse wrote: “We remain of the view that the medium term strategy of eliminating losses within the ‘developing’ businesses lacks visibility and that the core French model is likely to undergo further margin pressure as online penetration within France starts to accelerate.”