Trading Statement

RNS Number : 3919S

Home Retail Group Plc

09 September 2010

 



9 September 2010

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 and the first half overall.

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

"Argos' sales trend saw an improvement compared to the first quarter, despite its market being more challenging.  Homebase's sales performance again beat expectations and continued to be ahead of its market.

"While Homebase has produced a good first half peak trading performance on top of last year's strong result, total Group benchmark PBT in the first half is expected to reduce by approximately 20-25%.  For the year as a whole, we expect to deliver Group benchmark PBT of £250-275m, which is in line with the bottom half of the current analyst range.  As always, the outcome will depend upon trading at Argos in its peak Christmas period."

	Q1 (13 weeks to 29 May)		Q2 (13 weeks to 28 August)		H1 (26 weeks to 28 August)
Argos
Sales	£889m		£924m		£1,813m
Like-for-like change in sales	(8.1%)		(5.0%)		(6.5%)
Net space contribution to sales change	2.9%		2.2%		2.5%
Total sales change	(5.2%)		(2.8%)		(4.0%)
Gross margin movement	Down c.150bps		Down c.125bps		Down c.150bps
Homebase
Sales	£459m		£396m		£855m
Like-for-like change in sales	(1.4%)		0.0%		(0.8%)
Net space contribution to sales change	0.0%		(1.1%)		(0.4%)
Total sales change	(1.4%)		(1.1%)		(1.2%)
Gross margin movement	Down c.150bps		Down c.75bps		Down c.100bps

Argos

Total sales at Argos declined by 2.8% to £924m.  Net new space contributed 2.2%; four new stores opened and two closed in the quarter, taking the portfolio to 749; one store was relocated.

Like-for-like sales declined by 5.0% in the quarter.  Video gaming and large ticket home-related areas such as furniture saw challenging conditions.  Computers, white goods and toys all continued to show good growth, while small ticket homewares sales were ahead.

The online Check & Reserve service saw further strong growth, with the internet representing 32% of Argos' sales in total, up from 28% a year earlier.

The approximate 125 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency and shipping rates, with promotional activity also being higher year-on-year.

Homebase

Total sales at Homebase declined by 1.1% to £396m.  Net closed space reduced sales by 1.1%; a further two stores closed in the quarter, reducing the portfolio to 345.

Like-for-like sales were flat in the quarter.  Seasonal categories saw growth overall, led by garden planting and outdoor furniture.  'Big ticket' sales were also ahead, with growth in kitchens, bathrooms and bedrooms.  Sales for the remaining categories were lower overall.

The approximate 75 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency and shipping rates.

Share buy-back

A share buy-back programme of up to £150m over the following 12 months was announced on 28 April 2010.  To date, 44,910,000 shares have been purchased at an average price of 241p and a net cash cost of £109m.  The purchased shares represent 5.1% of the 877,445,001 issued ordinary shares at the 27 February 2010 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 its half-year results on Wednesday 20 October 2010.  An Interim Management Statement covering the 18 weeks from 28 August 2010 to 1 January 2011 will be announced on Thursday 13 January 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

 

 

TSTBIGDCGXGBGGI