Comet parent company Kesa Electricals has warned of a full-year loss for its UK operation after festive sales plunged by 7.3%.
Kesa blamed strong competition and the extreme weather for its like-for-like sales disappointment between November 1 and January 18.
It said record trading since Christmas failed to offset last month’s woes while the VAT hike on January 4 caused the new year recovery to soften.
Kesa now expects to report a small full-year retail loss for Comet and cautioned overall group profits for the period to April 30 were set to come in at the lower end of market forecasts.
The poor performance in the UK was mirrored in Kesa’s Italian, Turkish and Spanish operations, where it trades as Darty. These markets saw like-for-like sales drop 8.8%, leaving group sales down 4% despite more resilient trading at Darty France.
The pre-Christmas snowfall in Britain, together with adverse weather in France, the Netherlands and Belgium during its key trading period, knocked at least 2% off sales, said Kesa.
Kesa said Comet was forced into heavy discounting amid an increasingly competitive market against rivals such as Currys owner Dixons Retail and Carphone Warehouse’s Best Buy joint venture.
This left Comet’s profit margins down over the Christmas period while the chain was also hampered by a slowdown in internet sales after the introduction of a new software platform in November. Online sales rose 3%, against 8% in the half-year.
The news sent shares more than 8% lower, with retail experts at Investec Securities describing the Comet sales result as “horrible”.
Kesa officials said they had put in place a “number of additional measures” to improve revenue and cut costs, such as ramping up customer service and expanding its online offering with a greater focus on its ‘click and collect’ service.