Second Quarter Trading Statement

RNS Number : 8434N

Home Retail Group Plc

08 September 2011

 



8 September 2011

Home Retail Group plc

Second Quarter Trading Statement

Home Retail Group, the UK's leading home and general merchandise retailer, today updates on the trading of its second financial quarter covering the 13 weeks to 27 August 2011.

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

"Overall the performance in the quarter was in line with our expectations.  Argos' sales continued to be impacted by the decline in the consumer electronics market, while at Homebase, after a good first quarter which saw strong seasonal sales, the second quarter was more challenging.

"Whilst continuing to plan cautiously, we are in good operational shape as we approach the Christmas trading period.  We continue to develop and invest in our customer proposition across the businesses."

	Q1 (13 weeks to  28 May 2011)		Q2 (13 weeks to 27 August 2011)		H1 (26 weeks to 27 August 2011)
Argos
Sales	£817m		£859m		£1,676m
Like-for-like change in sales	(9.6%)		(8.6%)		(9.1%)
Net space contribution to sales change	1.5%		1.5%		1.5%
Total sales change	(8.1%)		(7.1%)		(7.6%)
Gross margin movement	Down c.75bps		Down c.100bps		Down c.75bps
Homebase
Sales	£458m		£382m		£840m
Like-for-like change in sales	1.6%		(3.1%)		(0.6%)
Net space contribution to sales change	(1.7%)		(0.7%)		(1.2%)
Total sales change	(0.1%)		(3.8%)		(1.8%)
Gross margin movement	Down c.50bps		c.0bps		Down c.25bps

Argos

Total sales at Argos declined by 7.1% to £859m in the quarter.  Net new space contributed 1.5% in the quarter; three new stores opened, four closed and in addition two were relocated taking the portfolio to 754.

Like-for-like sales declined by 8.6% in the quarter.  The consumer electronics market has remained weak and has again accounted for the majority of the reduction in Argos' sales, however laptops continued to perform strongly.  

Internet penetration remained strong at 34% of Argos' total sales, up from 32% a year earlier supported by continued growth in Check & Reserve.

The approximate 100 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency and shipping rates together with an increased level of stock clearance activity.  This was offset in part by a continued benefit from the sales mix. 

Homebase

Total sales at Homebase declined by 3.8% to £382m in the quarter.  Net closed space reduced sales by 0.7% in the quarter with the store portfolio remaining at 342.

Like-for-like sales declined by 3.1% in the quarter driven by a weaker performance in seasonal sales. Big ticket sales continued to be impacted by a challenging market, although fitted bedroom furniture continued to perform well benefiting from the rollout of the installation service and in-store displays.  Bathrooms has also continued to perform well.  Sales for the remaining categories were flat.

The flat gross margin performance was driven principally by the anticipated net impact of adverse currency and shipping rates offset by a sales mix impact.

Enquiries

Analysts and investors (Home Retail Group)

Richard Ashton                          Finance Director                         01908 600 291

Don Davis                                 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 its half-year results on Wednesday 19 October 2011.  An Interim Management Statement covering the 18 weeks from 28 August 2011 to 31 December 2011 will be announced on Thursday 12 January 2012.

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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