Kesa Cuts Dividend After Profit Slumps 42% on French Market

Kesa Electricals Plc, the owner of the Darty electronics chain, said full-year profit slumped 42 percent and cut the dividend as tough conditions across France, its largest market, weighed on sales of televisions.

Adjusted pretax profit dropped 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 Kesa’s unprofitable markets of Spain, Italy and Turkey fell as consumers pared spending on electronics, the company 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.”

Stock Declines

The stock was down 8.1 percent at 50.75 pence as of 1:04 p.m. in London, bringing this year’s decline to 25 percent.

Kesa said it will rename itself Darty Plc as of July 13 to reflect its brand in France after it sold the U.K. chain Comet earlier this year.

Mothercare Plc 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 a plan to relist shares of the electronics retailer in France was “under review” as it renames the company Darty. He said he wouldn’t rule out further asset sales.

Falque-Pierrotin said he’s working on operational improvements at Kesa’s Italian, Spanish and Turkish 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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