European televisions-to-tablets retailer Darty (DRTY) sparks into life as it delivers its 'Nouvelle Confiance' turnaround strategy a year ahead of schedule. CEO Regis Schultz (pictured below) also highlights progress with growth initiatives, which sees the shares spark up 4% to 71.75p.
Full-year results, which you can pick through here, show a welcome rise in profits from continuing businesses, despite like-for-like sales down 1.6% amid testing market conditions and against strong comparatives. The London-listed white goods purveyor, formerly known as Kesa, has had a tough recent history, yet its turnaround strategy is finally bearing fruit.
Launched in late 2012, the strategic plan has seen Darty refocus on its core markets of France, Belgium and the Netherlands whilst also driving through cost savings. Over the past few years, Darty has been heavily restructured, closing or selling businesses in the UK, where it traded as Comet, Italy, Spain and Turkey. Last August, it disposed of its majority stake in Datart, its Czech Republic and Slovakia-focused chain, while this February's acquisition of 18 profitable stores in the Netherlands has turned its BCC chain into the Dutch multi-channel electricals leader.
Darty says it has achieved its €50 million cost savings target ahead of plan and flags progress aplenty with the other key plank of Nouvelle Confiance, identifying growth opportunities. In main market France, the retailer is taking market share in small towns by opening franchise stores, while the acquisition of cut-price white goods site Mistergooddeal site is helping it grow share at the discount end of the market. Darty is also rolling out its kitchen offer in more and more stores; the kitchens business set to move into profit in the current financial year.
While Schultz flags 'signs of improvement in consumer confidence', Darty still faces headwinds in a notoriously low margin electricals sector. Gross margins are under pressure amid promotional market conditions and Schultz concedes 'the product cycle will continue to have an impact on our markets which are expected to remain challenging.'