12th Feb 2015 08:15
LONDON (Alliance News) - European electronics retailer Darty PLC saw its shares slide Thursday after it said revenue rose 2.4% in the third quarter of its financial year, supported by a good trading performance in France, but said margins were hit by a competitive market environment
Darty said it achieved further market share gains in France in what it called "challenging" market conditions, citing weak consumer confidence in the market. Darty shares opened lower Thursday, but then fell further, currently trading at 65.63 pence, down 7.9%.
"In the near term we expect our markets to remain challenging and we continue to remain focused on improving productivity in our cost base and developing our growth initiatives," said Chief Executive Regis Schultz in a statement.
Total group revenue was up 2.4% in the quarter to end-January, while like-for-like sales slipped 2.9%, hit by a strong comparative performance last year, a weaker than anticipated multi-media market over peak trading period, as well as terror attacks in and around Paris last month.
French revenue grew by 3.4%, buoyed by its recently acquired Mistergooddeal.com and the franchise business, but was down 3% on a like-for-like basis, partly to due a "significant" decline in footfall in early January in Paris. Total revenue in Belgium and the Netherlands fell by 1.6%, and like-for-likes were down 2.3%, hit by what it called a "weak multi-media market" and due to a number of national strikes in December.
"We were well prepared for the peak season, performed well over the Black Friday weekend and saw double digit growth in web sales, driven by a significant increase in click and collect, demonstrating the customer appeal of our multi-channel offer. Against a strong performance last year our overall sales in the period reflected a weaker than expected tablet and digital camera market, which more than offset growth across other categories, and the impact of the events in Paris in early January," said Schultz.
Darty said underlying group gross margin was down around 90 basis points, as product mix benefits were more than off-set by a competitive trading environment.
"Underlying gross margin was down around 100 basis points excluding the dilutive mix impact from Mistergooddeal.com and the franchise business, with the competitive market environment more than off-setting expected product mix benefits," the company said.
Darty was trading from a total of 383 stores at the end of January, 262 of which are in France, from both its own stores and franchises. It has 118 stores in Belgium and the Netherlands, and currently three overseas franchises.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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