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Darty sees pickup in French TV sales ahead of World Cup

By Dominique Vidalon

PARIS, Oct (KOSDAQ: 039200.KQ - news) 9 (Reuters) - Darty Plc, Europe's third-largest electrical goods retailer, is betting on the lure of improved technology and the upcoming 2014 FIFA soccer World Cup in Brazil to reverse a slump in TV sales in its core French market.

Chief Executive Regis Schultz told Reuters on the sidelines of the World Retail Congress in Paris on Wednesday the domestic TV set market could start to recover in coming months.

"I initially believed that the World Cup, notably if the French team qualifies, would mark the start of the market upturn, but there are signs this could happen as early as this winter," Schultz said.

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The CEO said the market had reached a low point and that customers who had bought TVs to upgrade to digital terrestrial TV standards in previous years would be tempted by new products, such as ultra high-definition TVs based on the 4K standard, offering 4,000 pixels or twice the resolution of the previous HD standard.

"The World Cup will be a plus because it's likely to be shot in 4K and provide content," Schultz added.

According to research group GfK Temax, consumer electronics sales fell 19 percent in France in the second quarter of 2013 to 979 million euros ($1.3 billion), with TV set sales mainly responsible for the fall, as cash-strapped consumers remained careful about leisure expenditure.

Like larger rivals - Metro (Other OTC: MTRAF - news) 's Media-Saturn and Dixons Retail (Other OTC: DSITY - news) - Darty is battling weak consumer spending and competition from online retailers.

Darty, which has more than 450 stores in Europe, has responded by cutting costs, exiting loss-making operations in Italy and Spain and focusing on its core markets of France, Belgium and the Netherlands.

Last month it posted improved sales at its core French operations in the first quarter to July 31 as a turnaround plan started to pay off.

Sales at Darty France, which represents 70 percent of total revenue, dropped 0.4 percent, a marked improvement from a 2.7 percent decline in the fourth quarter.

The group posted growth in all product categories, notably smartphones and tablets, which offset continued weak sales of TV sets, which make around 20 percent of Darty France revenue.

Darty shares have recovered from a 2013 low of 37 pence set in March but remain well below their 2005 peak of 377p. The stock, which edged up 1.8 percent to 70p by 1122 GMT, trades on a multiple of 12.4 times prospective earnings, a 12 percent discount to sector peers, according to Thomson Reuters data.