THE owner of electricals chain Comet warned of a full-year loss for its UK operation after Christmas sales plunged by 7.3%.
Kesa Electricals blamed strong competition and severe weather for the decline in like-for-like sales between November 1 and January 18.
It said record trading since Christmas failed to offset December’s disappointing showing – while the VAT hike on January 4 caused the new year recovery to soften.
Kesa now expects to report a small full-year loss for Comet. It said overall group profits for the period to April 30 were set to come in at the lower end of market forecasts.
The poor performance in the UK was mirrored in Kesa’s Italian, Turkish and Spanish operations, where it trades as Darty.
These markets saw like-for-like sales drop 8.8%, leaving group sales down 4% – despite more resilient trading at Darty France.
Kesa said bad weather before Christmas in Britain, France, the Netherlands and Belgium knocked at least 2% off sales.
Kesa said Comet was forced into heavy discounting amid an increasingly competitive market against rivals such as Currys owner Dixons Retail and Carphone Warehouse’s Best Buy joint venture.
This left Comet’s profit margins down over the Christmas period, while the chain was also hampered by a slowdown in internet sales after the introduction of a new software platform in November. Online sales rose by 3% against 8% in the half-year.
Christmas was also difficult for other consumer electronics retailers – with Dixons issuing a similar alert over annual profits last week following a 4% drop in UK and Ireland sales.
Argos saw like-for-like sales drop by 4.9% in the Christmas quarter, according to parent Home Retail Group.
Analysts had been expecting Kesa to make profits of £82.5m to £100m. They are now assuming a downgrade of about 10% to 15% or about £8.4m.