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UPDATE 1-Darty shares up after earnings top forecasts
June 19, 2014 / 9:51 AM / 3 years ago

UPDATE 1-Darty shares up after earnings top forecasts

* FY op profit up 11.2 pct to 73.4 mln euros

* Adj. pretax 60 mln euros vs f‘cast 55 mln

* Shares up 3 pct (Adds details, CEO comments to Reuters, share reaction, analyst)

By Dominique Vidalon and Pascale Denis

PARIS, June 19 (Reuters) - Darty Plc, Europe’s No. 3 electrical goods retailer, on Thursday posted higher annual earnings, helped by its turnaround strategy, and vowed to boost market share and profitability in its core French market despite difficult market conditions.

In France, where Darty makes 70 percent of its sales, the rollout of a franchise business, the acquisition of multimedia website Mistergoodeal and more stores with a kitchen offer would help Darty weather an expected 2 percent decline in the overall French market in 2014, CEO Regis Schultz told Reuters by phone.

Like others in the sector, Darty - third in Europe by revenue after Dixons Retail Plc and Metro AG’s Media-Saturn - is facing weak consumer spending and competition from online retailers.

London-listed Darty, which has more than 450 stores in Europe, has responded by cutting costs, exiting loss-making operations in Italy and Spain and focusing on its core markets of France, Belgium and the Netherlands.

Darty reported an 11.2 percent rise in operating profit to 73.4 million euros in the year to April 30 against 66 million euros a year earlier.

Adjusted group profit before tax was 60 million euros against 56.5 million in the year-ago period, which beat consensus expectations of 55 million.

Analysts at UBS, whose estimate was 57 million and who have a “buy” rating on Darty shares with a 135 pence price target, said the results were a positive surprise.

By 1044 GMT Darty shares gained 3.4 percent at 91p, having lost 25 percent so far this year, underperforming a 2.5 percent decline in the European retail sector index.

“For the coming financial year, market conditions are expected to remain challenging, but we are well placed to deliver our growth ambitions for the group,” Schultz said in a statement.

“Our aim over the medium term is to build our market share in France and increase retail profitability,” he added.

In December, Darty agreed to sell its Turkish business under a plan to eliminate losses in non-core markets and recently completed the acquisition of French multimedia website Mistergoodeal.

Darty said it would pay a total dividend for the year of 3.5 cents per share, unchanged from the previous year. (Editing by Jason Neely and David Holmes)

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