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Argos and Homebase owner, Home Retail Group, reports flat second quarter profits
Home Retail Group (LSE: HOME), announced their second quarter trading statement and a summary of overall first half performance.
Home Retail are one of the UKs largest retail groups with the primary ‘Argos’ and ‘Homebase’ brands, according to group Chief Executive Terry Duddy, improved cash margins and exceptional cost management have lead to profit expectations which fall in-line with last year.
Of the two principle brands Argos had a mixed first half, across its 739 stores Argos achieved total sales of £951m an increase of 2½%, with strong performances in television and personal computer sales contributing to the growth of the Argos’ key consumer electronics range. However compared with Q2 2008, quarterly like-for-like sales weighed on Argos’ overall performance declining 1.4%.
Argos’ ecommerce operations remain a substantial part of the business attributing to 28% of all sales, with their ‘Online Check & Reserve’ service growing 50% in the quarter.
The Homebase brand fared better with a quarterly like-for-like increase of 1.6%, total sales across Homebase’s 350 stores grew almost 3% to £401m. The Home and Garden focused retailer’s seasonal stock hampered gains as weather conditions failed to maintain spring’s excellent start, as such Homebase recorded a marginal decrease in seasonally related sales.
Homebase’s first half sales growth was driven primarily by ‘big-ticket’ categories such as kitchen suites and promotional clearances of ‘over-wintered’ stock.
Despite the apparent strength of interim trading statement, Home Retail Group Chief Executive Terry Duddy, emphasised a cautious outlook for the remainder of the year stating that Christmas consumer demand and currency fluctuations could be a significant factor throughout the second half;
“We approach the key Christmas trading period from a position of operational and financial strength, but continue to plan cautiously for consumer demand. We will also have a more significant impact from adverse currency movements in the second half of the year.”
