Kesa, the Anglo-French electricals retailer, reported a 38.1 per cent slump in first half pretax profit and said trading in the third quarter had remained subdued and warned investors not to expect conditions to pick up any time soon.
For the six months to July 31 the group posted pretax profit of £23.1 million, reflecting a dip into the red at the Comet chain in the UK and start up losses in Italy and Switzerland.
The group, which also owns Darty and BUT in France, said operating profits decreased by 27.3 per cent to £36.3 million as it faced up to tougher trading conditions, particularly in the UK.
Comet achieved trading losses of £3.3 million, down from profits of £4.4 million last time, after turnover fell 2.2 per cent to £623.7 million. Likefor-like turnover was adrift 4.8 per cent. The chain, which operates from 250 stores, said the trading weakness was most noticeable in sales of white goods.
Group turnover increased 4.2 per cent to £1.74 billion, but like-for-like sales, which strip out the impact of new and closed space, were down 0.8 per cent.
"Trading across our core markets since the end of July has not improved," the group said.
"In view of the continuing decline in consumer confidence across all our markets, we do not anticipate any changes to these conditions in the immediate future."
Chief executive Jean-Noel Labroue said: "As we predicted, the retail environment across our core markets has continued to be difficult, particularly in the UK.
"Our turnover growth has been driven by the strong demand for new technology products while sales of white goods remained weak."
Mr Labroue said Comet would be profitable over the full year to the end of January 2006 but is expected to deliver a negative like-for-like sales performance in the second half similar to that of the first period.
In France the 205-outlet Darty chain saw profit fall 4.8 per cent to £35.8 million, on turnover down 5.6 per cent, but still claimed market share gains. The 105-store BUT electricals and furniture business saw profit increase 1.9 per cent to £16.1 million on turnover up 12.1 per cent.
"With the key peak trading season still to come, it is too early to judge the outlook for the full year," said Mr Labroue.
"We will maintain our focus and commitment to cost control and margin management to help minimise the impact on the group's profitability while continuing to invest for future growth."
Finance director Simon Herrick said the group was "comfortable" with analysts' year to the end of January 2006 pretax profit forecasts, under IFRS, of about £172 million.