Kesa Electricals today announced plans for a dramatic expansion of store space at Comet but warned that sales growth across its UK and European retail empire could slow this year.

Jean-Noel Labroue, the chief executive, said that while new technology such as flat-screen TVs would continue to drive trading in 2007, sales were likely to grow at a “lower rate” than last year.

“We remain optimistic about the global level of consumer confidence but everybody has to remember that last year we had the World Cup which accelerated the TV replacement cycle.

“The market growth last year was something like 6 per cent to 7 per cent and this year the trend will still be positive but below last year’s exceptional rate.”

Despite fears of a slowdown, Mr Labroue said a number of investment plans would be “accelerated” across the business, which runs French chains BUT and Darty as well as Comet.

Mezzanine trading floors will be put into 40 Comet stores, 16 per cent of the total estate, over the next four years in a bid to boost business and avoid higher rents and rates.

Sales at four stores already fitted with mezzanine levels have soared by up to 50 per cent.

Comet will also be launching a “Comet on Call” home IT service to help confused homeowners cope with new technology and the switch to digital from analogue TV.

Kesa is already pressing ahead with expansion into Italy, Switzerland and Turkey.

Annual results today showed pre-tax profits across Kesa rose 15.4 per cent to £165.4 million for the year to February. Like-for-like sales rose 7.8 per cent.

Comet’s like-for-like growth in the year was 8.8 per cent, driven by strong demand for flat-screen TVs, laptops and multimedia products. Sales of white goods were also ahead of the market average, Kesa said.

Shareholders will receive a full-year dividend of 13.3p per share, up 9.9 per cent.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts