Electricals retailer Kesa said Comet slumped into the red in the year to April 30, making a loss of £8.9m compared with retail profit of £11.5m the year before.
The French retailer said margins were hit in a highly promotional trading environment in the UK, and that despite a focus on cost control, the retailer made a loss.
Comet will close 17 underperforming stores and there are no new stores in the pipeline. Kesa said that while it is implementing “strong turnaround plans” it is also “examining other strategic alternatives” for the business.
Like-for-likes plummeted 7.7% in the year to April 30 as the chain lost market share.
The retailer blamed “weakness in the market and tougher trading conditions in the final quarter” after the Vat increase.
“Overall Comet lost a small amount of market share in a market estimated to have been flat, particularly in large white goods against a very strong performance in the prior year,” said Kesa.
Online sales grew 2.5% in the period and now represent 15% of total sales.
There has been speculation in recent months that Kesa is considering selling or closing Comet.
Kesa chairman David Newlands said: “We have a strong turnaround plan for Comet to restore its profitability in the medium term.”
As part of the Comet turnaround, the retailer has introduced dedicated accessories areas into 190 stores as well as taken “significant actions” across the store portfolio, refitting 44 stores which have delivered on average uplifts of 14% in sales and 12% in gross margin.
The retailer said these actions “provide a platform to develop and accelerate plans to turn the Comet business around”.
It added that further actions are now being taken to build strong brand awareness; increase market share; develop a “consistent” store network supporting multichannel strategy; and make the back office infrastructure more efficient.
Kesa also operates the Darty and Vanden Borre chains, and operates in countries including France, Spain and Italy.
Adjusted group pre tax profit increased 2.3% to €93.2m.
Group like-for-likes fell 1.8% while group revenue increased 2.2% to €5,917.3 million, or 0.7% in constant currency.
Kesa chief executive Thierry Falque-Pierrotin said: “Overall we remained ahead of our markets.
“We anticipate all our markets will be challenging for the current financial year, particularly in the first half against the World Cup comparatives of last year.
“However from improved market positions in most of our markets, further cost measures in all countries with specific restructuring at Comet, BCC and Darty Spain and the strength of our cash generation and balance sheet, we are well prepared for these conditions.”