Interim Management Statement

RNS Number : 3663N

Home Retail Group Plc

10 June 2010

 



10 June 2010

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 28 February to 29 May 2010.

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

"Economic conditions remain both challenging and uncertain, with this quarter proving difficult in terms of consumers' willingness to spend.  The comparable period last year also contained some strong sales growth and share gains in certain product categories, particularly in consumer electronics at Argos.  For Homebase, this quarter represented a good outcome to its peak trading period.

"We continue to drive cash gross margin, further cost efficiencies and our increased investment plans.  At this early stage of the financial year, we are targeting to achieve a similar level of profitability to last year."

		Q1 (13 weeks to  29 May)
Argos
Sales		£889m
Like-for-like change in sales		(8.1%)
Net space contribution to sales change		2.9%
Total sales change		(5.2%)
Gross margin movement		Down c.150bps
Homebase
Sales		£459m
Like-for-like change in sales		(1.4%)
Net space contribution to sales change		0.0%
Total sales change		(1.4%)
Gross margin movement		Down c.150bps

Argos

Total sales at Argos declined by 5.2% to £889m.  Net new space contributed 2.9%; two new stores opened in the quarter, taking the portfolio to 747, and three stores were relocated.

Like-for-like sales declined by 8.1% in the quarter.  The video gaming market continued to be particularly weak and, against the strong gains made by Argos a year earlier, TV sales were also down.  These two categories accounted for approximately two-thirds of the overall decline in total sales.  Growth continued in personal computers, white goods and toys.

Growth from the internet remained strong, led by Check & Reserve; the internet represented 32% of Argos' sales, up from 28% a year earlier.  The Argos application for Apple's iPhone and Touch devices launched in late May and achieved 250,000 downloads in the first week.

The approximate 150 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency and shipping rates; as previously indicated, these are expected to have a negligible impact in the second half of the year.

Homebase

Total sales at Homebase declined by 1.4% to £459m.  Net space contribution was flat in this period; two stores closed in the quarter, reducing the portfolio to 347.  It is anticipated that the space contribution will be marginally negative over the next twelve months.

Like-for-like sales declined by 1.4% in the quarter.  Seasonal-related categories performed well, with sales held broadly flat in the period; this compared to double-digit growth last year when Spring 2009 weather conditions were particularly favourable.  'Big ticket' was also level on last year, supported by new product ranges and installation services.  Sales for the remaining categories were marginally negative.

The approximate 150 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency and shipping rates; as previously indicated, these are expected to have a negligible impact in the second half of the year.

Financial position

A share buy-back programme of up to £150m over the next 12 months was announced on 28 April 2010.  To date, 20,990,000 shares have been purchased at an average price of 256p and a net cash outflow of £54m.  The purchased shares represent 2.4% of the 877.4m issued ordinary shares at the 27 February 2010 balance sheet date.

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

Stuart Ford                               Director 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 of 30 May 2010 to 28 August 2010 on Thursday 9 September 2010, and its half-year results on Wednesday 20 October 2010.

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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