Home Retail Group reports a weak end to its financial year
Home Retail Group, the owner of Argos and Homebase, has said that its full year profits should be towards the top end of current market expectations despite seeing a drop in sales in the final eight weeks of the year.
Like-for-like sales at Argos fell by 5% in the eight weeks to 28 February which Home Retail Group said was partly due to annualising a 5% like-for-like sales growth in the same period last year, and to the impact of a more difficult market in a number of consumer electronic product categories. Total sales declined by 4% to £505 million.
Looking at the full year, total sales at Argos grew by 1.1% while like-for-like sales edged up 0.6%.
The retailer increased its store estate by 21 stores to 755 in the year. Store numbers were boosted by the opening of 30 new stores which included 20 Argos digital concessions within Homebase and seven new small format digital stores. Nine stores were closed in the period.
Full-year online sales represented 46% of total Argos sales, up from 44% last year. Within this, mobile sales grew by 38% to represent 25% of total sales.
Home Retail Group chief executive John Walden said: “Argos continues to make good progress with its transformation plan. Over the plan’s first two years we have delivered a significant amount of change and many new capabilities. However, it is important that we achieve an appropriate balance between the implementation of these new capabilities and ensuring good customer experiences. We are on track to deliver both the Argos transformation plan and the Homebase productivity plan over the next three years.”
Meanwhile, like-for-like sales at Homebase declined by 0.9% in the eight week period, principally due to annualising a 9% like-for-like growth in the same period last year. Total sales fell by 4.7% to £193 million.
While full-year total sales at Homebase declined by 0.7%, like-for-like sales increased by 2.3%.
There were 30 Homebase store closures and three openings in the year, which reduced the store portfolio by 27 stores to 296.
Walden added: “We are pleased to have delivered another full-year of like-for-like sales growth in both Argos and Homebase. Although our sales performance was weaker in the final short trading period, we managed the business effectively during this period and achieved a good performance in both gross margin and costs. As a result of this, we expect that group benchmark profit before tax for the FY15 financial year will be towards the top end of the current range of market expectations of £120 million to £132 million.”
