UK: Home Retail Group Sales Fall Not As Bad As Expected
Home Retail Group revealed today that sales had fallen less than analysts expected at both its Argos and Homebase units in the run-up to Christmas, and forecast yearly profit in line with its own previous forecast.
Like-for-like sales fell 4.9% in the 18 weeks to 1 January, compared with 5.7% decline expected by City analysts and the 6.5% drop in its first half reported in October. Homebase like-for-like sales fell 1.2%, compared with an expected fall of 2.0% and 0.8% fall in its first half.
Argos gross margin fell 25 basis points on increased clearance activity, while reduced promotional activity helped boost Homebase gross margin by 75 basis points.
The toughest market for Argos was in video gaming, while television sales were also down against a strong performance last year. The jewellery category was also weak but Argos saw an "excellent" performance in laptops and tablet computers, as well as further growth in white goods and toys.
The internet represented more than £700% or 38% of Argos sales, up from 35% a year earlier as more shoppers took advantage of online reservations and the Argos application for iPhones.
Terry Duddy, the group’s Chief Executive, commented: “Argos has performed in line with our original expectations for its peak period, despite some particularly challenging and volatile trading conditions in the build-up to Christmas. Homebase has again traded well in what is for them a less seasonally important selling period. We now expect Group benchmark PBT for the year to be around the mid-point of our previously guided range of £250-275m.”
NamNews - Thursday 13th January 2011