Interim Management Statement

RNS Number : 6693L

Home Retail Group Plc

15 January 2009

 



15 January 2009

Home Retail Group plc

Interim Management Statement

Home Retail Group, the UK's leading home and general merchandise retailer, today publishes an Interim Management Statement covering the 18 weeks from 31 August 2008 to 3 January 2009.

Terry Duddy, Chief Executive of Home Retail Group, commented:

'Our markets continue to be significantly impacted by the sharp reduction in consumer spending.  Argos and Homebase saw sales declines for the whole period in line with those announced in October. In a turbulent trading environment, increased promotional activity and seasonal stock clearance resulted in additional pressure on gross margins. However, with continuing tight cost control, the Group has delivered a robust financial performance. With two months remaining, we would expect Group benchmark profit before tax for this financial year to be around the current market consensus of £320m, with further good cash generation also expected.

'As previously indicated, we expect the trading environment for the next financial year to be extremely challenging, but the Group remains strongly positioned to extend its competitive advantage.'

		Latest period (18 weeks to 3 January)		Year-to-date (44 weeks to 3 January)
Argos
Sales		£1,850m		£3,707m
Like-for-like change in sales		(7.5%)		(5.3%)
Net new space contribution to sales change		3.9%		4.0%
Total sales change		(3.6%)		(1.3%)
Gross margin movement		Down c.125bps		Down c.100bps
Homebase
Sales		£479m		£1,308m
Like-for-like change in sales		(10.2%)		(10.2%)
Net new space contribution to sales change		6.4%		7.0%
Total sales change		(3.8%)		(3.2%)
Gross margin movement		Down c.50bps		Up c.50bps

Argos

Total sales at Argos declined by 3.6% to £1,850m in the 18 weeks to 3 January 2009. Net new space contributed 3.9%; there were eight openings, one closure and one relocation during the period, taking the portfolio to 725 (up from 700 a year earlier).

Like-for-like sales declined by 7.5% in the period. Growth was still positive in consumer electronics, driven principally by video gaming. Sales in more traditional gifting areas of toys and jewellery were marginally weaker than the company average. Market conditions continued to make furniture and homewares the most challenging categories. Internet sales increased to over £500m or around 30% of total Argos sales; two-thirds of which was online Check & Reserve orders for immediate store collection, which grew by over 30%.

The approximate 125 basis point gross margin decline reflected a continued adverse product mix, increased promotional activity and the impact of clearance of seasonal stocks.

Homebase

Total sales at Homebase declined by 3.8% to £479m in the 18 weeks to 3 January 2009. Net new space contributed 6.4%; there were two openings and one closure during the period, taking the portfolio to 346 (up from 320 a year earlier).

Like-for-like sales declined by 10.2% in the period. Kitchens remained positive, but other 'big ticket' areas were amongst the weaker performing categories. Energy efficiency products also performed well.

The approximate 50 basis point gross margin decline reflected increased promotional activity and the impact of clearance of seasonal stocks.

Other

There has been no significant change in the financial position of the Group since the publication of the half-year results. The Group maintains a strong balance sheet, with another year of good cash generation expected to increase last year's net cash position of £174m. Net interest income earned on the Group's net cash will be impacted following the recent significant reductions in market interest rates. The Group's net cash position is expected to continue to be sufficient to meet its needs in the foreseeable future. In addition, the Group has £700m of un-drawn committed borrowing facilities available, £685m of which does not expire until 2013.

As previously announced, post the half-year balance sheet date cash payments were made of £21.6m to fund share purchases by the Home Retail Group Employee Share Trust, and of £15.25m to acquire intellectual property rights to the Alba and Bush trademarks. The full announcements can be viewed at www.homeretailgroup.com/investors/announcements/.

Enquiries

Analysts and investors (Home Retail Group)

Richard Ashton        Finance Director                       01908 600 291

Stuart Ford             Head of Investor Relations

Media (Finsbury)

Rollo Head                                                            020 7251 3801

There will be a conference call for analysts and investors to discuss this statement at 8.15am this morning. The call can be listened to live on the Home Retail Group website www.homeretailgroup.com. An indexed replay will also be available on the website later in the day.

Home Retail Group will announce details of trading for the remaining 8 weeks of the current financial year (4 January 2009 to 28 February 2009) on Thursday 12 March 2009, and its full-year results on Wednesday 29 April 2009.

Information in this announcement is based upon unaudited management accounts. In addition, certain statements made are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements.

 

END

 

 

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