First Quarter Interim Management Statement

Thursday 15 September 2011

Kesa Electricals' First Quarter Interim Management Statement

Kesa Electricals plc today announces an interim management statement for the period 1 May 2011 to date. Financial information is for the period from 1 May 2011 to 31 July 2011, based on unaudited management accounts.

·; In weakening market conditions and against the strong comparatives in the prior year, total revenue down by 9.8% and by 9.9% on a like-for-like basis

·; Strong market share gains in France, Belgium and Turkey

·; Group gross margin up 40 basis points

·; Continued successful progress of our cross channel web-generated sales strategy with strong double-digit increases at Darty France, the Other established and Developing businesses

·; Comet turnaround plan underway while continuing to examine other strategic alternatives

Revenue growth as reported Revenue growth in local currency

in Euros

* BCC, Vanden Borre and Datart

**Darty Italy, Darty Turkey and Darty Spain

Commenting on the Group's performance, Chief Executive Thierry Falque-Pierrotin said,

"The start of the year has been tough against the strong World Cup comparatives of last year and weakening market conditions. Nevertheless, the implementation of our strategic actions helped to deliver increased gross margin, further progress on our cross channel web strategy and market share gains in France, Belgium and Turkey.

"We will continue to implement our strategy of growing a cross channel, service led, specialist model, adapting our plans to meet an increasingly challenging market environment, while maintaining focus on the strength of our cash generation and balance sheet."

Group

Total Group revenue fell by 9.8 per cent in euros, 8.2 per cent in local currency, and by 9.9 per cent on a like-for-like basis. The revenue performance reflected increasingly challenging market conditions and the strong comparatives from last year. Web-generated sales continued to be developed successfully with double digit growth at Darty France, Other established and Developing businesses and now represent over 11 per cent of total product sales. The overall increase of 4 per cent compared to the prior year reflected the impact of an updated web strategy at Comet.

In line with our strategy of driving sales of higher margin products, we continued to see growth in small domestic appliances and accessories. However, this only partly offset a vision market which was significantly down against the World Cup last year and a weaker refrigeration and air conditioning market reflecting the poor summer across Europe. Against this background we achieved an overall gross margin improvement of around 40 basis points for the period.

Darty France

Darty France continued strongly to outperform a market that is weakening more than anticipated, and saw overall gross margin improve by 10 basis points. Revenue fell by 2.6 per cent and by 3.7 per cent on a like-for-like basis. Stable white goods sales and growth in multi-media were insufficient to off-set a strong decline in TV sales. Web-generated sales continued to grow strongly, by 18 per cent, and now represent nearly 12 per cent of total product sales. During the quarter, one new store was opened and two stores were refurbished.

Comet

The quarter was a transitionary period for Comet as it made good progress in launching its turnaround plan. This included a specific focus on arresting margin loss together with the continued relative outperformance of higher margin product categories, which together contributed to an improvement in gross margin of 80 basis points for the quarter.

Against strong comparatives including the World Cup and a one-off multi-media initiative last year, Comet revenue fell as anticipated by 21.7 per cent in local currency and by 22.1 per cent on a like-for-like basis, with an improving trend seen through the quarter. The Comet.co.uk website showed an increasingly improved trend, but overall internet growth was impacted by the decision to align fully store and web prices with a consequent reduction in web "click and collect" transactions together with the down scaling of two specialist web sites. During the period one store was closed and one right-sized. In addition, after a successful store relay trial, 60 further stores will be relayed before peak season. The service centre consolidation and logistics retender remain on target.

Other established businesses

At the Other established businesses, BCC, Vanden Borre and Datart, revenue fell by 1.8 per cent in local currency and by 2.8 per cent on a like-for-like basis. The benefits of the Darty concept continued to be demonstrated with Vanden Borre again delivering sales growth and market share gains. As the Darty concept was further developed at BCC there was an improved gross margin trend through the period and market share gains in its core categories. Trading at Datart remained challenging. Overall gross margin improved by 30 basis points. Web generated sales increased by 24 per cent and now represent nearly 9 per cent of total product sales. During the period Vanden Borre completed two refurbishments and BCC opened one new store.

Developing businesses

At the Developing businesses, Darty Turkey delivered a strong sales performance, taking share in a positive market. Darty Italy held share in an increasingly promotional market that has experienced a deteriorating trend in recent months. Darty Spain maintained share in what remained a very difficult market and despite closing the five stores not viable for rebranding to Darty. As a consequence of these market conditions overall gross margin was down 170 basis points. During the period, Darty Italy opened one store and Darty Turkey opened two new stores.

Outlook

With consumer confidence falling to a low ebb across Continental Europe and the UK , market conditions are likely to remain challenging for some time. In these circumstances we will continue our strategy of growing our cross channel, service led, specialist model while maintaining our focus on the strength of our cash generation and balance sheet.

The positive impact of the World Cup and the one off multimedia initiative in the UK in the first half of last year, will result in the balance of revenue, profit and cash flow being significantly more weighted than last year towards the second half of the financial year.

Financial position

Except as detailed above, there have been no material events or transactions impacting the Group's strong financial position that have taken place since the previously announced 30 April 2011 balance sheet date.

ENDS

 Store numbers and selling space as at 31 July 2011

There will be a telephone conference call for analysts at 07:45 on 15 September 2011. If you would like to listen to a recording of this call, please visit the company's website www.kesaelectricals.com after 10.00am.

The Group will issue its half year results on Wednesday 7 December 2011.

Enquiries

Analysts

Kesa Electricals plc

Simon Ward +44 (0) 20 7269 1400

Media

Simon Ward UK +44 (0) 20 7269 1400

Vinciane Beurlet France +33 (0) 1 43 18 52 00

Finsbury

Rollo Head +44 (0) 20 7251 3801