Comet owner blames snow for profit warning

Comet, which sells kitchen appliances, televisions and consumer electronics products, has fared particularly badly since 1 November

Kesa Electricals, the company behind Comet, has joined the ranks of retailers blaming the snow for a poor sales performance by issuing a profits warning.

Like-for-like sales across the company have fallen by 4% since the start of November, making the company a clear 'Christmas loser'. It said the decline was partly due to "adverse weather conditions" in its major markets.

Shares in the company fell sharply this morning, losing 7.1% to 140p, as analysts estimated that the snow cost Kesa up to 25m of sales or almost 8.5m of profit.

Comet, which sells kitchen appliances, televisions and consumer electronics products, has fared particularly badly since 1 November. It suffered a 7.3% decline in comparable sales due to the icy December and strong competition from rival retailers.

In another blow, the company has seen sales trends "soften" at Comet since VAT was hiked to 20% two weeks ago.

"We are now anticipating that Comet will deliver a small retail loss for the year," Kesa told the City. It also admitted that Comet's new e-commerce platform has suffered "some disruption", which meant that web-generated sales only grew by 3%.

Even without the bad weather in December, Kesa's results would probably have been disappointing. The company estimated that the snow had wiped 2% off its its like-for-like sales. On the upside Kesa's French chain, Darcy, grew like-for-like sales by 0.4%, and Comet enjoyed record trading between Boxing Day and New Year.

Kesa is the first retailer to confirm that the VAT rise has hit its turnover. Analysts were concerned by! the adm ission.

"The statement that UK trading has softened since the VAT rise on Jan 4th will also spook the market about the other big-ticket retailers," said Nick Bubb of Arden Partners.

Matthew McEachran of Singer Capital Markets said that Comet had been squeezed as the retail market became "highly competitive and promotional" prior to Christmas.

"Trade did pick up in the week after Christmas, once the snow melted and no doubt aided in part by the impending VAT rise, but this was not enough to offset the weaker performance seen in the preceding 4 weeks," McEachran added.


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