12th Sep 2007 07:02
Home Retail Group Plc12 September 2007 12 September 2007 Home Retail Group plc Second Quarter Trading Statement Home Retail Group, the UK's leading home and general merchandise retailer, todaypublishes an update on trading in its second financial quarter and the firsthalf overall. Terry Duddy, Chief Executive of Home Retail Group, commented: "We are pleased to report positive like-for-like growth at Argos against strongcomparatives last year. At Homebase however, there was a reversal inlike-for-like growth as the weather conditions impacted its seasonal categories.For the first half overall, further progress on gross margins and continued costcontrol is expected to see profits at Homebase ahead of last year and stronggrowth at Argos. While we therefore expect a good first half profit resultacross the group, the uncertain consumer outlook means we must remain cautiousat this stage in the financial year." ---------- Q1 Q2 H1 13 weeks to 13 weeks to 26 weeks to 2 June 1 September 1 SeptemberArgosSales £893m £942m £1,835mLike-for-like change in sales 0.9% 1.8% 1.4%Net new space contribution to saleschange 3.6% 3.0% 3.3%Total sales change 4.5% 4.8% 4.7%Gross margin movement Up c.150bps Up c.100bps Up c.125bps HomebaseSales £463m £391m £854mLike-for-like change in sales 2.7% (8.0%) (2.5%)Net new space contribution to saleschange 2.5% 1.8% 2.2%Total sales change 5.2% (6.2%) (0.3%)Gross margin movement Up c.300bps Up c.300bps Up c.300bps ---------- Argos Total sales at Argos grew by 4.8% to £942m in the second quarter of thefinancial year. The contribution to sales growth from net new space was 3.0%; afurther five new stores were added, three were closed and one was relocated toreach 685. The like-for-like sales increase of 1.8% was driven by further stronggrowth in flat panel TVs and video games systems. Good growth in 'satnav' andmobile phones offset continued weakness in landline phones and audio categories,while seasonal-related products declined due to the adverse weather conditions.Check & Reserve grew by 24% to represent 12% of sales, with a further 23% ofsales being home delivery orders placed either in-store or remotely. Gross margin was ahead by approximately 100 basis points, driven by ongoingsupply chain initiatives and foreign exchange benefits. There was a higher levelof distribution costs as a result of the increase in overseas sourcing. Grossmargin gains for the full year are still expected to lessen due to a greaterlevel of investment in lower prices. The new Argos catalogue, launched on 28 July, includes an overall pricereduction on reincluded lines of approximately 5%, greater than the 3% of theprevious Spring/Summer edition. It also provides the biggest ever choice with18,100 lines, nearly 1,500 more than a year before. Virtually all storesstock-in the core range of 10,500 lines for immediate collection, with a further3,700 being Argos 'Extra' lines and 3,900 representing home delivery-only lines. Homebase Total sales at Homebase declined by 6.2% to £391m in the second quarter of thefinancial year. The contribution to sales from net new space was 1.8%; therewere two new store openings, two closures and two relocations during the period,leaving the store portfolio at 311. The adverse weather conditions during mostof the quarter led to a 20% decline in seasonal-related categories. Thesecategories normally account for approximately one third of second quarter sales,thereby driving the overall 8.0% like-for-like sales decline. Non-seasonalcategories were generally stable, with kitchen sales continuing to see goodgrowth. Gross margin increased by approximately 300 basis points, driven principally byongoing supply chain initiatives and foreign exchange benefits. Clearanceactivity has been less than expected, as seasonal lines where appropriate havebeen held over to next year. As stated at the time of the demerger, Homebase would be moving one of itsdistribution centres. This has now been successfully achieved, resulting inone-off distribution costs being incurred. A one-off benefit in the quarter fromstore-related property transactions approximately offsets the costs of thedistribution centre move. Enquiries Analysts and investors (Home Retail Group)Richard Ashton Finance Director 01908 600 291Stuart Ford Head of Investor Relations Media (Finsbury)Rollo Head 020 7251 3801 There will be a conference call for analysts and investors to discuss thisstatement at 8.30am this morning. The call can be listened to live on the HomeRetail Group website www.homeretailgroup.com. An indexed replay will also beavailable on the website later in the day. Home Retail Group will announce its half-year results on Wednesday24 October 2007. An Interim Management Statement covering the 18 weeks of2 September 2007 to 5 January 2008 will be announced on Thursday 17 January2008. Information in this announcement is based upon unaudited management accounts. Inaddition, certain statements made are forward looking statements. Suchstatements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual events or results to differmaterially from any expected future events or results referred to in theseforward looking statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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