Sales fall at Argos and Homebase
Home Retail Group, the owner of Argos and Homebase, has reported that sales fell at both companies over the Christmas period.
Like-for-like sales at the Argos catalogue chain declined 8.8% in the 18 weeks to the end of 2011 while gross margins fell by 50 basis points. Total sales at Argos decreased by 7.8% to £1.72 billion.
Argos said sales had been hit by a weak consumer electronics market, in particular video gaming and audio, although laptops and tablets remained strong performers.
The retailer’s gross margin decline was driven by the anticipated adverse impact of shipping rates together with an increased level of promotional investment.
The group said there would be a number of Argos store closures in the remainder of the financial year as leases reached their expiry date. This would result in the store portfolio being marginally down at the end of this financial year from the 751 stores at the start of the year.
Total sales at DIY retailer Homebase declined by 2.5% to £475 million in the period while like-for-like sales fell 2.6%. Big ticket item sales were down while sales in Homebase’s other categories were broadly flat. The gross margin rate increased by approximately 25 basis points from the previous year.
The group said it would close its UK homewares trial format, HomeStore&More, at the end of February 2012 with closure costs amounting to £10illion.
Terry Duddy, chief executive of Home Retail Group, commented: “In a trading environment that has been both volatile and demanding, Homebase has again seen more resilient sales. Argos sales continue to be impacted by the market decline in consumer electronics categories, however we saw internet penetration reach over 40% of total sales, with Check & Reserve being boosted by the development of mobile commerce as customers embrace our leading multi-channel proposition.
“We have managed the business tightly over the peak trading period and expect Group benchmark profit before tax for this financial year to be around the mid-point of the current analyst range of £78 million to £125 million.”
The group said it anticipated a significant cut in the full year dividend for the current financial year.
