Kesa Electricals, Europe’s third-largest electricals retailer, on Wednesday said it would monitor rivals’ reactions before making its own decisions on how to address the planned consumption tax rises in the UK.
The UK government on Tuesday announced plans to raise VAT from 17.5 per cent to 20 per cent from January as part of measures to seize control of the public finances strained by the biggest financial crisis in decades.
“Clearly the fact that it is planned for January will give us time to prepare,” said Thierry Falque-Pierrotin, chief executive of Kesa. “We will follow the market trend. In terms of pricing, I think there will be a balance between deflation [in many of the technology goods it sells] and the VAT rise.”
His comments came as Kesa, the operator of the Comet and Darty electronics stores, reported full-year results that beat its own forecasts. The group said underlying pre-tax profit had risen 18 per cent to £81.9m, ahead of its previous guidance of £76m.
For the year to April 30, revenue rose 3.4 per cent to £5.1bn. On a like-for-like basis, turnover fell 1.5 per cent. Its shares closed up 1.2p at 118.6p.
Kesa made a statutory pre-tax profit of £69.6m, compared with a loss of £81.8m a year ago, when it took more than £140m in restructuring and impairment charges. Earnings per share were 7.7p from a loss of 21.1p a year ago.
Revenue in its French business rose 7.4 per cent compared with the previous year, which Kesa ascribed to market share gains in white goods such as dishwashers and vacuum cleaners, and multimedia products.
Like most retailers, Kesa had a tough 2009, but while rivals such as DSG International revamped stores, Kesa cut back on spending. It also closed stores in Spain and sold others in Switzerland.
However, Mr Falque-Pierrotin was cautious for the group’s outlook and said he expected many other European governments to introduce tough austerity measures, which could negatively affect consumer spending.
“While we have started the year in line with our expectations, we anticipate our major markets remaining challenging for the rest of the current financial year,” he said.
Kesa recommended a final dividend of 4.15p, taking the total pay-outs for the year to 5.9p, an 18 per cent increase from a year ago.
Get alerts on UK companies when a new story is published