Interim Management Statement

RNS Number : 1225I

Home Retail Group Plc

09 June 2011

 



9 June 2011

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 13 weeks from 27 February to 28 May 2011.

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

"Trading conditions, particularly at Argos, have proved to be more difficult and volatile than anticipated.  Despite this the Group has gained or held market share in its businesses.

"At Homebase, the quarter represented a good outcome to its peak trading period reflecting the favourable weather, together with the strong execution of its seasonal offer. 

"For Argos, the consumer electronics market represents a substantial proportion of its sales and has experienced a further significant decline.  The difficulty of this market, together with the volatility of overall sales, has made the balance of the year more difficult to predict.

"While we remain cautious for the balance of the financial year, we are focused on our operational performance while continuing to invest across the businesses."

		Q1 (13 weeks to  28 May 2011)
Argos
Sales		£817m
Like-for-like change in sales		(9.6%)
Net space contribution to sales change		1.5%
Total sales change		(8.1%)
Gross margin movement		Down c.75bps
Homebase
Sales		£458m
Like-for-like change in sales		1.6%
Net space contribution to sales change		(1.7%)
Total sales change		(0.1%)
Gross margin movement		Down c.50bps

Argos

Total sales declined by 8.1% to £817m.  Net new space contributed 1.5%; Four new stores opened in the quarter, taking the portfolio to 755; in addition one store was relocated.

Like-for-like sales declined by 9.6% in the quarter.  The consumer electronics market has declined by significantly more than we anticipated and has accounted for the majority of the reduction in Argos' sales.  However, data available for March and April shows that Argos has held its share in this market, helped by continued growth in laptops.  Toys and seasonal products such as garden furniture and barbeques performed well in the quarter.

The number of downloads of the Argos iPhone 'app' reached 1.7m and internet penetration remained strong at 33% of Argos' sales representing a small increase on the comparable period last year. 

The approximate 75 basis point gross margin decline was driven by the anticipated net impact of adverse currency and shipping costs together with stock clearance activity, offset in part by a benefit from the sales mix.

Homebase

Total sales at £458m were in-line with last year.  Net closed space reduced sales by 1.7% in this period; one new store was opened in the quarter, increasing the portfolio to 342.

Like-for-like sales increased by 1.6% driving a further gain in market share in the quarter, with seasonal related categories, such as garden furniture, plants and exterior decorating, performing strongly.  The big ticket category was marginally down reflecting the market challenges in this area, although fitted bedroom furniture continued to perform well benefiting from the rollout of the installation service and in-store displays.  Bathrooms has also performed well. Sales for the remaining categories were marginally down.

The approximate 50 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency and shipping costs together with the sales mix impact of the strong seasonal performance.  

No other material events, transactions or impacts on the Group's strong financial position have taken place since the previously announced balance sheet date.

Enquiries

Analysts and investors (Home Retail Group)

Richard Ashton                          Finance Director                         01908 600 291

Tony Newbould                          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 8.30am 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 13 weeks from 29 May 2011 to 27 August 2011 on Thursday 8 September 2011, and its half-year results on Wednesday 19 October 2011.

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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