Home Retail weathers Argos woes
Friday 12 March 2010
Home Retail Group toasted an upgrade in full-year profit expectations yesterday, despite the dire January weather contributing to one of Argos's worst performances in its 37-year history in recent weeks.
The general merchandise group, which also owns the DIY chain Homebase, said that pre-tax profits would come in at £290m for the year to the end of February, about £5m ahead of market expectations. Home Retail, which has no net debt, also boasted £410m of free cash on its balance sheet.
However, Argos suffered a 9.4 per cent fall in underlying sales for the eight weeks to 27 February, as January's snow hit footfall. The catalogue giant's sales were also dented by the late launch of its spring and summer catalogue, which happens every five to six years due to the launch day of Saturday shifting in the calendar.
Terry Duddy, the CEO of Home Retail, said: "This eight-week period is one of the worst performances that we have reported publicly." It reported a similar drop in October 2008.
Mr Duddy said that without the snow and late catalogue launch, underlying sales would be down by only 2 to 3 per cent. Total sales at Argos fell by 6.6 per cent to £537m over the eight weeks. He said the catalogue retailer had seen a "slowdown" in sales of televisions and video games recently, but had enjoyed "reasonable" trade on white goods and PCs. Over the full year, Argos's underlying sales slipped by 2.1 per cent. Mr Duddy said: "The mass-market customer is saying, 'Life is pretty tough and I am pretty cash-strapped.'"
In contrast, Homebase delivered better underlying sales, down by just 0.6 per cent over the eight weeks, driven by robust sales of kitchens and bathrooms. But the 349-store DIY chain's gross margins were down 425 basis points, largely pulled lower by the weak pound against the dollar.
- 1 Amy Winehouse statue unveiled in Camden
- 2 Lego breaks out of the toy box and heads for the gallery
- 5 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
George Galloway on Scottish independence: The political class is doing what Hitler couldn’t – destroying Britain
Daniele Watts: Django Unchained actress detained in Los Angeles after being mistaken for a prostitute
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
Scottish independence: Britain faces 'constitutional crisis' at next election
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...