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By | Paul Kunert 15th September 2011 12:46

Comet can't sell anything, including itself

Fate of troubled retailer to be decided by Xmas

Kesa Electricals has vowed to determine the future ownership of UK subsidiary Comet before Christmas, having failed so far to flog the business to interested parties.

The European retailer today filed numbers for its fiscal first quarter – from the start of May to the end of July – with group sales down 10 per cent.

However trading at the troubled UK arm was even worse as revenues sank by over 20 per cent during the three-month period.

Chief exec Thierry Falque-Pierrotin said Kesa would resolve the fate of Comet "before Christmas" but refused to comment on any sale, amid talk in the FT that suitors want a £200m dowry to cover pension liabilities and working capital requirements.

Of course, Kesa may just keep Comet, as it has always claimed to be running a turnaround strategy in parallel to divestment plans.

On the results Falque-Pierrotin said: "The start of the year has been tough against the strong World Cup comparatives of last year and weakening market conditions.

"Nevertheless, the implementation of our strategic actions helped to deliver increased gross margin, further progress on our cross channel web strategy and market share gains in France, Belgium and Turkey."

The retailer said the drop in UK sales was expected while its online biz, despite showing an "increasingly improved trend" was hit by the "decision to align fully store and web prices", which led to a reduction in click-and-collect transactions.

Only one store in the UK was closed during the quarter with one "right-sized" and 60 stores due to be "relayed before peak season".

Comet is on track to consolidate 14 regional services centres to two sites and slash the number of warehouses from three to two, Kesa said.

The outlook for the future was cautious, said Falque-Pierrotin.

"With consumer confidence falling to a low ebb across continental Europe and the UK , market conditions are likely to remain challenging for some time.

"In these circumstances we will continue our strategy of growing our cross channel, service led, specialist model while maintaining our focus on the strength of our cash generation and balance sheet," he said. ®

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