Darty to sell Turkish business as turnaround gathers pace

* Darty (LSE: DRTY.L - news) in exclusive talks to buy Mistergooddeal from M6

* H1 revenue up 1.8 pct like-for-like, France returns to growth

* H1 pretax loss 16.3 mln euros after 25 mln charge

* Confident earnings will improve in medium term

* Shares outperform European retailers so far this year

By Dominique Vidalon

PARIS, Dec 18 (Reuters) - Darty Plc, Europe's third-largest electricals retailer by sales has agreed to sell its loss-making Turkish business and plans to buy a French retail website to boost online expansion, as it steps up efforts to revive the company.

Darty said on Wednesday that while market conditions remained challenging, it was confident its turnaround strategy would deliver higher earnings over the medium term, lifting its shares by 4.4 percent.

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

London-listed 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.

Activist investor Knight Vinke, which owns 25 percent of Darty and has a seat on its board, has been pushing the company to accelerate the pace of change.

Darty's shares have gained 86 percent so far this year, outperforming a 15 percent rise in the European retail sector index.

The company said on Wednesday it had agreed to sell its Turkish operations to local specialist technology retailer Bimeks.

Darty said it will sell its 28 stores but retain the business's liabilities. Financial terms have yet to be agreed, but Darty said it expected the deal to be broadly cash neutral.

"While the Turkish market is growing and dynamic, we concluded that we could not expect to make significant progress with the business without making a further significant investment," Darty Chairman Alan Parker said in a statement.

The deal could complete by the end of April (Frankfurt: B2B.F - news) , when Darty's financial year ends.

FRANCE BACK TO POSITIVE GROWTH

Darty also said on Wednesday it was in exclusive talks with media group M6 to buy Mistergooddeal, a website that sells white goods, TVs and furniture. It did not disclose financial terms.

Formed in 2000, Mistergooddeal.com offers over 10,000 products and attracts 2 to 4 million visitors per month. At the end of 2012 its revenue was 128.1 million euros.

Darty's operating profit rose 26 percent to 15.2 million euros ($20.9 million) in the first half of Darty's financial year, as the retailer cut costs and sales at its French business rose for the first time in three years.

Sales at Darty France, which account for 70 percent of group's total revenue, rose 2.7 percent in the six months ended Oct (KOSDAQ: 039200.KQ - news) . 31.

"This performance is even more remarkable in a market which is down 3 percent," Chief Executive Regis Schultz said.

Darty France benefited from its first summer sale, a customer loyalty scheme and a 12 percent rise in online sales, which now represent over 13 percent of total product sales.

Smartphone and tablet sales improved and small domestic appliances also saw some growth, but television sales volumes fell.

Group revenue rose 1.8 percent on a like-for-like basis.

It made a pretax loss of 16.3 million euros as a result of a 25 million euro one-off charge for the reduction of administrative jobs in France. That compared with a profit of 5.3 million euros a year earlier.

Darty is also reviewing its Datart business in the Czech Republic and Slovakia and said it hopes to make a decision on the future of these operations by the end of its financial year.