Argos boss departs as Home Retail Profits Slump

Home products retailer Home Retail Group announced the departure of Argos’s managing director as it unveiled a sharp fall in profits due to lower sales at the catalogue-based chain and predicted further sales declines.

The company said that Sara Weller informed the board that she is stepping down for “personal reasons.”

Home Retail’s pre-tax profits for the year to 26 February came in at £254m, down 13% from the previous year and in line with expectations. Sales were down by 3% to £5.85bn. The full-year dividend was maintained at 14.7p.

Sales at the Argos were down by 3.5% to £4.19bn. On a like-for-like basis, stripping out the 2.1% boost from new retail space, they were down by 5.6%. Argos’s customers, many of whom are among the hardest-pressed in the country, have been squeezed by the tough economic conditions.

Sales at Homebase were down by 1.4%, though on a like-for-like basis they only fell by 0.3%, taking into account a 1.1% reduction due to the removal of floor space, with eight shops closed.

“Economic uncertainty and a low level of consumer confidence continue to adversely impact customer spending patterns,” chairman Oliver Stocken said.

“Despite these challenges the group continues to build on its strategic advantages to ensure that it will be well positioned for the economic recovery over the longer term.”

Home Retail said prospects for 2011/12 “are uncertain as consumers' disposable income, and their willingness to spend, is impacted by an increased VAT rate, an increase in personal taxes and the rising cost of living plus the additional threat of public sector job losses and potential interest rate increases. “

The company is planning for low-to-mid single digit like-for-like sales declines at Argos and a broadly flat outcome at Homebase.

Source : Roy Gallivan - Sharecast
www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=4186294