Kesa turns on to change

Activist investor Knight Vinke put some spark in electricals retailer Kesa’s share price this week after building up a 3% stake.

Knight Vinke is understood already to have had a small holding in the Anglo-French group and to have bought more shares after last week’s prelims.

The results showed signs of improvement at Kesa after a tough time during the recession. The retailer came in just ahead of expectations, mainly on the back of the performance of its flagship Darty business.

Much attention in this country is focused on Kesa’s Comet chain, which holds second place in the market behind Dixons (which is readopting its old name in preference to DSGi).

There has been a sense that Kesa has responded with a Gallic shrug as the UK market has transformed around it. The reinvigoration of Dixons and the debut of Best Buy appear to have pulled the carpet from under Comet, which once made service standards its USP.

Things could be changing. Kesa chief executive Thierry Falque-Pierrotin last week set out some of the strategy for Comet, including a brand refresh, marketing changes and leverage of its mid-sized stores which differentiate Comet from its big shed rivals.

There are plenty of sceptics, including Dixons boss John Browett, who thinks the changes detailed so far at Comet do not compare with the “fundamental” transformation he has led, such as new formats and a cultural shift. Of course he would say that, and his own track-record at a business many thought was unchangeable shows that attempts to reinvigorate Comet cannot be written off immediately.

But Kesa chiefs have looked asleep at the wheel as far as the UK is concerned and they have a tougher challenge to react now than they would have had a

few years back. Knight Vinke apparently thinks Kesa is undervalued. But a lot of work will be needed - or a bid - for Kesa to make up ground in retailing and its valuation.