Homebase LFL sales rise by 0.6% in Q3

Home Retail Group, the UK’s leading home and general merchandise retailer, today publishes a trading statement for the 18 weeks from 31 August 2014 to 3 January 2015.

Total sales at Homebase declined by 2.7% to £451m due principally to a reduction in net space of 3.3%. There were 12 store closures in the period, resulting in a total of 19 closures year to date. The Homebase portfolio has therefore reduced to 304 stores and we remain on track to close a total of around 25 stores in the current FY15 financial year.

Like-for-like sales increased by 0.6% in the period. There was growth in sales of seasonal products, principally as a result of the warm weather during the period. Big ticket sales performance was broadly flat, while sales in the remaining product categories were slightly down.

The approximate 100 basis point gross margin decline was principally driven by the adverse impact of stock clearance activity in respect of the store closures previously announced as part of the Productivity Plan. This was partially offset by the anticipated impact of favourable currency and shipping costs.

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

“I am pleased with our overall performance during our important peak trading period, having managed through a volatile trading environment with good control of both gross margin and costs. This year's adoption of ‘Black Friday’ promotional events generally by the UK market significantly impacted the shape of Argos’ sales over its peak trading period. For example, on the day alone sales at Argos were up by 45%, while at the same time, it received over 13.5 million visitors to its digital channels, three times last year's visitors, with mobile channels representing 71% of visits and 61% of digital sales. The draw of discounts affected trade both before and after that busy weekend as consumers satisfied their Christmas shopping lists with bargains.

"In anticipation of volatility in trading patterns and the profit pressure caused by aggressive promotions, Argos pursued a more cautious trading stance over the period. This resulted in broadly flat like-for-like sales, but achieved both improved gross margins and good cost management. Argos also made good progress during the period on its Transformation Plan to reinvent itself as a digital retail leader, as sales through digital channels increased to represent half of Argos’ total sales.

“As a result of our trading strategy in the period, we continue to expect Group benchmark profit before tax for the current FY15 financial year to be in line with the current market consensus.”

Click here to view the full publication: http://www.insightdiy.co.uk/articles/home-retail-group-q3-trading-update/622.htm

Source: Home Retail Group
http://www.homeretailgroup.com/