Homebase LFL sales increase by 5.9% in Q2

Home Retail Group, the UK’s leading home and general merchandise retailer, today updates on the trading of its second financial quarter covering the 13 weeks to 29 August 2015.

Homebase:

Total sales at Homebase declined by 2.8% to £378m as a result of the ongoing store closure programme, which resulted in 8 store closures in the quarter and which reduced the store portfolio to 271. Closed space reduced sales by 8.7% in the quarter.

Like-for-like sales increased by 5.9% in the quarter with sales growth broadly across all product categories, but particularly in big ticket products. This growth continued to be partially supported by both the trade transfer and the stock clearance sales benefits attributable to the previously announced store closure programme and distribution centre closure.

The approximate 75 basis point gross margin decline was principally driven by the adverse impact of the previously announced stock clearance activity together with an adverse sales mix impact, mainly attributable to the growth in margin dilutive big ticket products. These declines were partially offset by a reduced level of promotional activity together with the anticipated impact of favourable currency and shipping costs.

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

“Argos delivered an improved sales performance in the second quarter. It made good progress with new stores, opening more than 50 digital concessions within Homebase and Sainsbury’s, which have generated encouraging early results. Consistent with our previous guidance, Argos’ sales continued to be adversely impacted by the performance of a number of key electrical product categories as well as weaker overall market conditions in August.

“Homebase performed well across its peak trading season, delivering good like-for-like sales growth in both quarters of the first half, while continuing its progress on both its store closure programme and the Productivity Plan more broadly.

“The outcome for the Group’s full-year generally depends upon the important Christmas trading period at Argos which, this year, seems less predictable than usual due to a less certain promotional environment. Our teams have made solid progress preparing for this period, including substantially completing the technology and operational steps necessary to introduce new store collection and home delivery propositions to our customers. We will be making increased marketing and promotional investments to launch these propositions and we expect customers to increasingly embrace them over time.”

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Source: Home Retail Group
www.homeretailgroup.com