15th Jan 2015 07:35
LONDON (Alliance News) - Home Retail Group PLC Thursday said it expects to report benchmark pretax profit for the current financial year that's in line with market expectations, after its Argos unit traded "cautiously" over the key Christmas period, meaning sales rose only slightly but gross margins were also higher.
The company also reported a decline in total sales and gross margins at its Homebase DIY chain, as expected, as it closed stores and sold off the stock at discount.
In a trading statement, the retailer said total sales rose 0.8% to GBP1.82 billion in the 18 weeks to January 3 at Argos, driven by a 0.7% increase in net new space. Like-for-like sales grew a modest 0.1%, driven by sales of products like video games, televisions and tablets that was partially offset by weak jewellery sales.
It said Argos performed particularly well over 'Black Friday', but said it adapted its stance to protect margin and its cost base, "as the highly promotional and high volume nature of this event threatened profit in this key period". The gross margin at the business was up about 25 basis points compared with last year, it said.
Internet sales at Argos were about 49% of total sales, up from 46% for the same period a year earlier, with mobile commerce sales up 40%.
Total sales at Homebase fell 2.7% as net sales space declined 3.3% due to 12 store closures. Its Homebase store portfolio is now 304 stores and Home Retail said it's on track to close about 25 stores in total in the current financial year.
Like-for-like sales rose 0.6% at Homebase, driven by growth in seasonal product sales, but gross margin at the business declined by about 100 basis points as it cleared the stock from the stores it closed at a discount.
By Steve McGrath; [email protected]; @stevemcgrath1
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