Comet has announced that it is axing 17 of its shops in the UK.
The retailer has decided to close the under-performing shops after it experienced an £8.9 million loss in the last financial year.
Comet wouldn’t tell TechEye which stores were facing the chop. A spokesperson said “there were no more details” at present which we find hard to swallow. However, Comet reassured customers who had taken out warranties at the affected shops will still be covered.
He told us in Comet’s case “each warranty is underwritten by a third party insurer so the closures do not affect customers or their warranties. They can take a faulty product covered by one of these back to any store”
As well as closing down the stores, Comet will consolidate 14 regional service centres into two sites. It also plans to reduce its warehouse network from three to two. Staff can expect a cull at the head office.
According to figures from Dow Jones, Comet saw a buoyant start to the year thanks to a strong World Cup campaign at the time. It also saw record trading over the Christmas and New Year. But that wasn’t enough to cover up the weak patches and tougher trading conditions in the final quarter.
It raked in revenue of £1,537.9 million, a fall of 6.8 percent compared to the year before.
Nevertheless, it paid for 44 core store refits, as well as going through a Comet brand refresh. Unfortunately for Comet, it’s still not top on most people’s list of thrilling destinations.
The physical electronics space may continue to plunge while internet sales take over, as we’ve seen before.
According to the British Retail Consortium, British consumers are overwhelmingly cautious about their personal finances and are reluctant to spend, particularly on big ticket items. That means the stuff that’s more expensive compared to the rest around it.
Retailers are also being hit by surging commodity prices, property and employment costs. Sales are being driven by promotions and special offers at the cost of profit margins, while consumers are postponing the purchase of non-essential items.
Its most recent figures show that UK retail sales values were 2.1 percent lower on a like-for-like basis from May 2010, when sales had risen 0.8 percent. On a total basis, sales were down 0.3 percent, against a 3.0 percent increase in May 2010.
The internet could also be to blame for Comet’s struggle. According to figures from the Interactive Media in Retail Group (IMRG) £58.8 billion was spent online in 2010, an 18 percent increase on 2009. It predicted that 2011 would also see another 18 percent growth at around £69 billion in total e-retail sales.
Although it pointed out that the electronics sector averaged 14 percent growth during 2010 it warned things remain rosy.
Like the BRC, it said that it was seeing low-value products performing very well, but in sectors with higher-value products, such as electrical, the growth was much lower.