Annual numbers from European electrical goods specialist Darty (DRTY) demonstrate its 'Nouvelle Confiance' turnaround plan is working. With profits improved for the first time in three years and ambitious growth plans outlined, the white goods retailer's shares are in demand, sparking up 3.4% to 91p.
For the year to April, Darty delivered better-than-expected adjusted pre-tax profits of €60 million, up 6% year-on-year before €29.4 million of restructuring charges and helped by cost savings in core market France.
Total sales edged ahead 0.5% to €3.58 billion which perhaps looks disappointing given it has resorted to lots of discounts to try and increase sales volumes. Like-for-like sales moved 1.7% higher, reflecting market share gains in France and Belgium and brisk sales in tablets and smartphones. Closing the year with €185.2 million net debt (2013: €150.6 million), Darty decides to hold the total dividend at 3.5 cents.
Formerly known as Kesa Electricals, Darty is listed in the UK, yet now has no retail business in this country following the sale of the Comet chain in 2011 for £2. The £466 million cap has been pruning the unprofitable parts of its portfolio amid weak consumer confidence in Europe's low margin electrical goods market.
Having sold its loss-making Italian operations towards the end of the prior financial year, Darty has gone on to close its Spanish business and sell its Turkish business to local electricals retailer Bimeks. It is also looking to dispose of its shareholding in Czech and Slovakian operator Datart.
These restructuring moves are enabling chief executive Regis Schultz (pictured below) to refocus on driving profit recovery and market share gains through his '4Ds' programme. Mainly focused on France, where Darty is market leader and Darty.com growing at pace, the plan 'to Drive trading, Digitalise Darty, Develop the brand and Deliver cost efficiencies' helped arrest falling footfall in France and generate 2.8% same-store sales growth last year.
'For the coming financial year, market conditions are expected to remain challenging, but we are well placed to deliver our growth ambitions,' says Schultz, adding 'our aim over the medium term is to build our market share in France and increase retail profitability.'
Schultz is seeking to boost Darty's growth by expanding into smaller French catchment areas through a new franchise store model and by snaring a greater share of the budget white goods market, aided by its recent acquisition (31 Mar) of French entry price electricals site Mistergooddeal.com. In addition, emboldened Darty is turning its attentions to expansion in the French installed kitchens market, which in turn drives high-end white goods volumes.