Kesa Cuts Dividend After Profit Slumps 42% on French Market
Kesa Electricals Plc (KESA), the owner of the Darty electronics chain in Europe, reported profit slumped 42 percent and cut the dividend as tough conditions across France, its largest market, weighed on sales of televisions.
Adjusted pretax profit slumped to 59 million euros ($75 million) in the year through April, the London-based retailer said today in a statement. The retailer will pay a final dividend of 1.25 cents a share, bringing the total dividend to 3.5 cents, down from 7 cents last year. The stock fell as much as 12 percent.
Revenue in France and in its unprofitable markets of Spain, Italy and Turkey fell as consumers pared spending on electronics, Kesa said. The French market will probably continue to shrink, though at a slower pace than last year’s 4 percent decline, Chief Executive Officer Thierry Falque-Pierrotin said on a conference call.
“We don’t see a swift profit recovery -- indeed, we see downside to consensus forecasts,” said Philip Dorgan, an analyst at Panmure Gordon with a sell recommendation on the stock. “The rebasing of the dividend is sensible in the light of trading conditions.”
The stock was down 6.3 percent at 51.75 pence as of 9:08 a.m.
Kesa said it will rename itself Darty Plc as of July 13 to reflect its brand in France after it sold its U.K. chain Comet earlier this year.
Mothercare Plc (MTC) Chairman Alan Parker will replace David Newlands as chairman, Kesa said. Parker, who is a board member, will succeed Newlands after the annual shareholder meeting on Sept. 13.
“Markets throughout Europe were exceptionally difficult in 2011/12,” Falque-Pierrotin said in the statement. “The market across Europe is expected to remain tough, but we will benefit from the strength of our service-led positioning, cross-channel approach and improving operational efficiency.”
Newlands said the company is considering relisting the electronics retailer in France as it renames the company Darty, the brand it operates in that market. He said he wouldn’t rule out further asset sales.
Falque-Pierrotin said he’s working on operational improvements at Kesa’s Italy, Spain and Turkey divisions, and developing more efficiencies with its Darty France unit in the supply chain and sourcing. The retailer is “monitoring the market changes we see country-by-country,” he added
“I don’t think in business you can ever say never,” Newlands said of a potential sale of those assets.
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