Argos reports 2.9% rise in LFL sales

Home Retail Group has reported on trading for the 26 weeks ended 30th August.

Argos Operational and Financial Review

Argos Transformation Plan progress:
- Completed the national roll-out of the ‘hub & spoke’ network enabling same day collection of c.20,000 products, and commenced roll-out of online payment and fast track collection in-store
- 32 digital stores now trading across three different formats
- Internet penetration accounted for 43% of total sales including mobile commerce which grew by 45% and accounted for 22% of total sales

Total sales in the 26 weeks to 30 August 2014 increased by 3.0% to £1,769m. Sales increased by 0.1% as a result of the store portfolio increasing by a net 13 stores, including the nine Argos digital concessions within Homebase and the four small format digital stores previously discussed. The Argos portfolio now comprises 747 stores. Like-for-like sales increased by 2.9%.

Electrical products continued to deliver sales growth driven by growth in TVs, video gaming and white goods, partially offset by declines in tablets. This growth together with strong sales of seasonal products during the first quarter, more than offset small declines in furniture, jewellery and homewares.

The gross margin rate was level with the same period last year, with an adverse product mix
impact from the growth in sales of margin dilutive electrical products being principally offset by a reduced level of promotional sales.

Total operating and distribution costs increased by £13.7m as a result of increased sales, underlying cost inflation and investment in strategic initiatives partially offset by further cost saving initiatives. Cost productivity was 2% for the first half of FY15. Argos will continue to focus on maintaining a lean and flexible cost base over the remainder of FY15 and beyond, but the further investment in strategic initiatives and the ongoing impact of underlying inflationary cost pressures are expected to result in net cost increases going forward.

Benchmark operating profit was £12.0m; a £4.3m or 57% increase on the comparable period
last year.

John Walden, Chief Executive of Home Retail Group, said:

“The Group has performed well in the first half of the year, delivering further like-for-like sales growth at both Argos and Homebase and a 13% increase in Group benchmark profit before tax.

“Argos continued to build on its sales growth from the previous financial year, increased its benchmark operating profit whilst also making good progress with its Transformation Plan.
Homebase delivered a good peak trading period, performing well throughout the half despite being up against the tough comparators of a strong second quarter last year. At this mid-way point in our financial year, we continue to expect to deliver full-year benchmark profit before tax in line with current market expectations, however, as always the full-year outcome will depend upon the important Argos Christmas trading period. "

See the full results publication here: http://www.insightdiy.co.uk/articles/home-retail-group-half-year-trading-update/580.htm 

Source : Home Retail Group
www.homeretailgroup.com