Darty's new CEO plans job cuts, says no sale planned

Tue May 28, 2013 8:27am EDT

* Relations good with top shareholder Knight Vinke - CEO

* Darty eyes cost cuts in France, meeting staff May 31

* Still looking to sell Czech, Slovak operations

By Dominique Vidalon and Pascale Denis

PARIS, May 28 (Reuters) - Electronics retailer Darty plans to cut costs in its core French market to cope with the weaker economy, which could entail job cuts but no store closures, its new chief executive said on Tuesday.

Regis Schultz, who joined as CEO on April 23, said Europe's third-largest electronics and appliance retailer behind Media-Saturn and Dixons Retail is not up for sale and relations with top shareholder, activist investor Knight Vinke, were good.

Schultz, who previously headed French furniture and electricals chain BUT, has a mission to steer a turnaround plan at Darty, formerly known as Kesa, as it battles weak consumer demand in Europe and intense competition from online retailers.

Darty, which has more than 450 stores in Europe, has sold loss-making operations in Spain and is focusing on its core markets of France, Belgium and the Netherlands.

France, where Darty employs 11,500 and has 230 stores, accounts for 70 percent of group sales.

Darty is looking to sell its operations in the Czech Republic and in Slovakia but has set no timetable for the sale. "We are looking for the best solution" Schultz told a news conference in Paris.

Last year Darty sold its stores in Italy and in Britain, where it traded as Comet.

PLANNED CUTS

Darty, which posts full-year 2012/13 earnings on June 19, had an annual turnover of nearly 4 billion euros in the previous year. Earlier this month it reported a 0.8 percent fall in like-for-like revenue in the fourth quarter, including a 2.7 percent decline in France.

Darty France outperformed the market in the quarter, with market share gains in all major product categories, though the French TV set market is expected to fall 22 percent in fiscal 2013 and 10.3 percent the following year, after French households bought large numbers of TVs to match new digital terrestrial standards in previous years.

Schultz said Darty was meeting staff representatives on Friday to present its cost-cutting plan for France. Planned cuts would affect mostly administrative functions and posts at its headquarters at Bondy, a Paris suburb. It has already quit a second building in the heart of Paris.

Activist investor Knight Vinke, which owns 25 percent of Darty and has a seat on its board, has been pushing the company to accelerate the pace of change.

Speculation over the future of Darty heated up last month after French daily Le Figaro said the group had been put up for sale. But Knight Vinke has told Reuters it had not hired banks to handle a possible sale of its Darty stake.

Schultz told Reuters on Tuesday that the sale of Darty "is not an issue now" and that relations between Eric Knight, the CEO of Knight Vinke, and Darty's board were "very good".

Darty shares have gained 24 percent this year, giving it a market capitalisation of 373 million pounds.

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