Home Retail is hobbled by blow from soggy summer

Home Retail chief executive Terry Duddy has blamed last year’s spring and summer washout for annual profits more than halving at its DIY chain Homebase.

This led to the group’s bottom line shrinking for the fifth consecutive year, although storming sales of tablet devices drove an improved performance at its Argos business.

Home Retail was also buoyed by ending the year with a massive cash pile of £396 million, which will help it to invest heavily in the group’s two chains over the next three years.

Homebase, which has 336 stores, blamed the wettest summer for more than 100 years and consumers cutting back on DIY spending for a 52 per cent fall in profits to just £11 million over the 12 months to February 25.

Duddy said: “The DIY market has been particularly tough and the first half saw weather that was pretty deplorable and we missed the major season for Homebase.”

The wet weather also decimated sales of barbecues, garden furniture and lawnmowers at rivals Wickes and B&Q last year.

The soggy performance at the DIY chain dragged down Home Retail’s annual profits by 10 per cent to £91 million, which pales in comparison with the £433 million it posted in 2008.

This was despite Argos, which  has 737 shops, delivering its first  rise in underlying sales for five  years and growing its profit by 6 per cent  to £100.3 million.

Duddy hailed the chain’s “growth in consumer electronics, particularly tablets, but also white goods, core electricals and toys”. He also waxed lyrical about how the internet accounted for 42 per cent of Argos’s total sales, as shoppers increasingly order on the web and collect in stores.

Home Retail will invest £300 million at Argos over the next three years and has already started to refurbish 32 stores in the North-east, which will have a reduced catalogue offer but will stock more products for next-day, or immediate, collection for online orders. Group sales slipped back marginally to  £5.47 billion.

Home Retail expects to close 10 stores at both Homebase and Argos this year.

Duddy warned landlords it will seek to renegotiate more favourable rents on 345 shop leases that come up for renewal over the next five years or it could exit those as well.

The group is paying a full-year dividend of 3p, which is down on last year’s 4.7p.