Homebase LFL sales up 5.9%

Home Retail Group has announced its results for the 52 weeks to 1 March 2014.

The following excerpts are from the Home Retail Group year-end report, available to view, in full, on our Industry Articles pages: http://www.insightdiy.co.uk/articles.asp

The Homebase strategy is to position itself as a clearly differentiated multi-channel home enhancement retailer, creating both a store and online experience, with a softer, more stylish look and feel. Homebase is progressing with its Renewal plan which incorporates store format development, an enhanced multi-channel offer, exclusive brands and increased levels of customer service. This plan accelerates the development of Homebase as a destination for a broader range of home and garden projects, securing a larger share of customer spend and a higher frequency of visit.

Homebase Financial Review:
Total sales in the 52 weeks to 1 March 2014 increased by 4.1% to £1,489m. Net space sales change reduced sales by 1.8% with 13 store closures reducing the store portfolio to 323. Like-for-like sales increased by 5.9%. After a challenging start to the year, seasonal products benefited from the improved weather in the second quarter, annualising against poor weather through the summer in the prior year. Big ticket sales were also ahead of last year, whilst remaining categories were broadly flat compared to last year.

The gross margin rate was down by approximately 100 basis points principally driven by an adverse impact from promotional sales in the first quarter and an adverse sales mix impact resulting from the strong performance of margin dilutive seasonal and big ticket products.

Total operating and distribution costs increased by £9m, as a result of increased sales, underlying cost inflation and cost investment in strategic initiatives partially offset by further cost saving initiatives. Benchmark operating profit increased by £7.9m, or by 71%, to £18.9m (FY13: £11.0m).

Operational review:

Store estate and format development:
Homebase has continued to trial the new format for its stores, supported by increased levels of customer service, which creates a shopping experience that helps customers find ideas and inspiration for their homes and gardens. Following the evolution of the new proposition for stores in Ruislip and Solihull last year, 12 additional proposition stores were completed during FY14 taking the total number completed to 15. These stores are achieving sales uplifts in line with expectations and there has been a high level of positive customer feedback to the refits.

As part of Homebase’s on-going management of the store portfolio, there were 13 store closures during FY14 leading to a reduction in the store portfolio to 323 stores. This level of store closures was consistent with its plans at the start of the year and, over the next five years, Homebase has around a further 65 store lease renewals or break clauses due. During the year, Homebase’s stores in Ireland were subject to an examinership process which resulted in two store closures and rent reductions across the remaining 13 Irish stores. Homebase will continue to examine the opportunity for store closures, relocations or downsizes.

Multi-channel sales have grown by 53% year-on-year to represent approximately 7% of total Homebase sales. This growth has been driven by increased website traffic as a result of an increased investment in this channel as a route for customer acquisition, as well as the introduction of improved delivery options, allowing customers to order products via the internet for delivery to either their home or the Homebase store of their choice. This service is now available on either a standard three day delivery basis or as a next day or named day offer. Both services are available on around 15,000 Homebase products and have experienced good levels of uptake.

Source : Home Retail Group
www.homeretailgroup.com