COMET parent Kesa Electricals today revealed a return to annual profits despite ongoing sales pressure at its flagship UK chain.
Europe-wide retailer Kesa reported profits of £69.6 million in the year to April 30, up from losses of £81.8 million after improving profits at its Darty business in France and overhauling underperforming operations.
But its UK arm Comet suffered a 1.2% drop in like-for-like sales after a difficult second half as competition intensified from rivals such as DSG International and new entrant Best Buy.
Kesa joined other retailers in cautioning over the outlook for consumer markets.
It said it would stick to its strategy plan announced last December to bolster profits and focus more on web sales - a tactic that helped annual online revenues leap by 8.9% in the Comet business.
Kesa chief executive Thierry Falque-Pierrotin said the group would remain competitive with rivals despite yesterday's VAT hike.
"We will whatever happens follow the market trend in trerms of pricing, but we also have to keep in mind that in electrical retailing we have substantial deflation," he said.
The group is braced for similar tax increases across its European markets as other countries follow suit with austerity measures.
"We are really planning for challenging markets ahead," said Mr Falque-Pierrotin.
The World Cup has given Kesa a welcome boost so far in the current year, with recent television sales up by 30% to 35% across main markets.
Kesa also outlined plans to roll out a major refurbishment programme and new merchandising ideas.
The group will revamp 40 Comet stores this year after successful trials of its new format, with the introduction of laptop and digital camera tables for another 30 outlets.
It is also pushing further cost cutting actions in the UK, following a year in which it merged two regions and closed a distribution centre.
Shares rose 2% as today’s profits on an underlying basis - at £81.9 million - came in higher than expected.
Kesa said Comet outperformed a wider depressed market, which it estimated fell by 2%.
The chain had a strong year for large white goods sales, according to Kesa, although its full-year same store sales slipped from a 2% gain at the half year stage.
Comet’s like-for-like figures were partly hit by the bad UK weather at the start of the year and also tougher comparatives.