Homebase set for another year of DIY retail gloom

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The Independent Online

Home Retail Group has forecast another year of double-digit falling sales at its DIY chain, Homebase, as it battles against dire trading conditions in the wider home improvement market.

The gloomy forecast for Homebase came as Home Retail Group, which also owns the catalogue giant Argos, posted a 24 per cent fall in benchmark pre-tax profits, before exceptionals, to £328m for the year to 28 February 2009.

Terry Duddy, the chief executive of Home Retail Group, said it expects Homebase's like-for-like sales this year to fall by a similar level to the 10.2 per cent slump posted over the 52 weeks. He said: "We expect 2009/10 to be as difficult as 2008/09."

Argos has also forecast that its underlying sales this year will fall at a similar rate to the 4.8 per cent decline seen in the 52 weeks to 28 February.

The group's total sales fell by 1 per cent to £5.9bn over the period. On a more positive note, Home Retail Group had a net cash position of £284m at the year end and held its full-year dividend at 14.7p. But the group will increase the price of products at Homebase and Argos, as the cost of goods it sources overseas in dollar-denominated countries, primarily China, goes up by about 10 per cent in the second half.

Home Retail Group recorded total exceptional pre-tax charges of £694m, which pushed it into a £394m loss for the year to 28 February. Homebase accounted for the bulk of these charges with a £651.2m writedown in the carrying value of its assets, together with onerous lease charges on its property.