Homebase and Argos report positive LFL sales in Q1

Home Retail Group, the UK’s leading home and general merchandise retailer, today publishes an Interim Management Statement covering the 13 weeks from 2 March to 31 May 2014.

The full publication can be found on our Articles pages (http://www.insightdiy.co.uk/articles.asp)

Argos:
Total sales at Argos grew by 4.8% to £868m. Although the store portfolio remained unchanged at 734, net closed space reduced sales by 0.1% in the quarter.

Like-for-like sales increased by 4.9% in the quarter. Growth was driven by a strong performance in seasonal products together with continued sales growth in electrical products, principally as a result of growth in video gaming and TVs, partially offset by a market driven decline in tablets. This combined growth more than offset small declines in the homewares, furniture and jewellery categories.

Internet sales grew in line with total company sales and represented 42% of total Argos sales. Within this, mobile commerce grew by 56% and represented 21% of total Argos sales.

The approximate 25 basis point gross margin decline was principally driven by an adverse
sales mix impact from the growth in margin dilutive electrical products.

Homebase:
Total sales at Homebase grew by 5.5% to £445m. Net closed space reduced sales by 2.4% in the quarter; there was a net reduction of one store, bringing the store portfolio to 322.

Like-for-like sales increased by 7.9% in the quarter driven by strong sales of seasonal
products, which represented around 40% of total sales in the quarter and which benefited from better weather conditions in comparison to the first quarter of the prior year. There was also growth in sales of big ticket products, while sales for the remaining categories were slightly lower overall.

The approximate 50 basis point gross margin decline was principally driven by an adverse sales mix impact from the growth in the margin dilutive seasonal and big ticket product categories.

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

“We have had a good start to the year, with both Argos and Homebase delivering positive like-for-like sales growth. This growth was aided by a strong performance in seasonal products in both businesses, due to better weather overall versus the comparable period last year. In addition to this strong performance in seasonal products, Argos delivered further sales growth in electrical products whilst Homebase achieved growth in sales of big ticket products.

“We are pleased with this encouraging start to the year, but remain mindful that we will annualise more challenging comparators in both businesses through the remainder of the year, including Homebase’s very strong seasonal performance in the second quarter of last year. At this early stage of the financial year, we expect to deliver full year Group benchmark profit in line with current market expectations

Source : Home Retail Group
www.homeretailgroup.com