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UPDATE 4-Kesa says no recovery in its markets yet

Published 06/24/2009, 09:45 AM
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* Not planning for markets to recover in current year

* Year pretax loss 81.8 mln stg, vs 128.8 mln pretax profit * Exceptional costs 150.9 million sterling

* Dividend 5.0 pence, vs 14.4 pence

* Shares up 6 percent at 1319 GMT (Adds link to FACTBOX on Kesa, updates shares)

By James Davey

LONDON, June 24 (Reuters) - Europe's No 3 electricals retailer Kesa Electricals Plc said it had seen no recovery in its markets and was not expecting one any time soon, as it swung to a full-year loss and slashed its dividend.

"We haven't seen any recovery in the countries where we operate and we are trading in line with our expectations," Chief Executive Thierry Falque-Pierrotin told reporters.

He said "no one knows" when trading would pick-up.

"What we do as managers is make sure that if the market stays where it is we should be able to go through the storm and re-emerge stronger than we were when we entered the recession.

"We have not planned for any recovery in the coming year."

Falque-Pierrotin, who succeeded Jean-Noel Labroue as CEO in January, said he would cut capital expenditure and focus on cost management, cash generation and reducing losses at the group's businesses in Spain, Turkey and Italy.

He also said he would develop the firm's service-led model, improve its Internet offer and increase group-wide sourcing.

He said no disposals were on the agenda apart from its loss-making Swiss business, which Kesa said last week it was close to selling.

Kesa owns French market leader Darty, Comet in the UK and trades in another 10 nations.

Some analysts were left underwhelmed. Nick Bubb, retail analyst at Pali International, said Kesa's update contained "a disappointing lack of anything new on company strategy".

The group made a pretax loss of 81.8 million pounds for the year to April 30 versus a pretax profit of 128.8 million pounds in the previous year which reflected exceptional costs of 150.9 million pounds.

These included a goodwill and intangible asset write-off of 118.5 million pounds at loss-making Spanish business Menaje del Hogar and 23.1 million pounds of restructuring costs, including 20 store closures in Spain and 300 job losses at Comet.

Shares in Kesa, have lost 39 percent of their value over the last year, underperforming the DJ Stoxx European retail index by about 32 percent.

The stock was up 6 percent at 108.75 pence at 1319 GMT, reflecting the market's relief that underlying profit was in line, and valuing the business at 595 million pounds ($985.7 million).

Kesa's retail profit fell 46 percent to 77.0 million pounds, but was in line with analysts' expectations.

The fall reflected losses of 23 million pounds in Spain and profit down 77 percent to 10.1 million pounds at Comet.

Full-year sales increased 9.8 percent to 4.95 billion pounds, but were down 6.2 percent on a like-for-like basis.

European electrical retailers have struggled over the last year as cash-strapped consumers have reined in discretionary spending on products such as washing machines, fridges and computers amid rising unemployment and falling property prices.

But there are some signs trading may be improving.

British retail sales fell in June at the same pace as in May, though orders placed with suppliers picked up, a survey by the Confederation of British Industry showed on Wednesday.

Last Friday Britain's John Lewis Partnership, the employee-owned retailer, reported an 8.2 percent increase in electrical and home technology sales at its department stores for the week to June 13.

On Thursday DSG International Plc, Europe's No 2 electricals retailer, is expected to report a 79 percent slump in full-year profit but improved trading in May and June.

Kesa ended the year with net cash of 7.5 million pounds but cut its total dividend payout by 65 percent to 5 pence. For a FACTBOX on Kesa click on (Editing by Rupert Winchester and Rhys Jones)

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