HRG Q2 Trading Statement

Home Retail Group, the UK’s leading home and general merchandise retailer, today updated on the trading of its second financial quarter covering the 13 weeks to 27 August 2011.

Terry Duddy, Chief Executive of Home Retail Group, commented:
“Overall the performance in the quarter was in line with our expectations. Argos’ sales continued to be impacted by the decline in the consumer electronics market, while at Homebase, after a good first quarter which saw strong seasonal sales, the second quarter was more challenging.

“Whilst continuing to plan cautiously, we are in good operational shape as we approach the Christmas trading period. We continue to develop and invest in our customer proposition across the businesses.”

Total sales at Argos declined by 7.1% to £859m in the quarter. Net new space contributed 1.5% in the quarter; three new stores opened, four closed and in addition two were relocated taking the portfolio to 754.

Like-for-like sales declined by 8.6% in the quarter. The consumer electronics market has remained weak and has again accounted for the majority of the reduction in Argos’ sales, however laptops continued to perform strongly.
Internet penetration remained strong at 34% of Argos’ total sales, up from 32% a year earlier supported by continued growth in Check & Reserve.

The approximate 100 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency and shipping rates together with an increased level of stock clearance activity. This was offset in part by a continued benefit from the sales mix.

Total sales at Homebase declined by 3.8% to £382m in the quarter. Net closed space reduced sales by 0.7% in the quarter with the store portfolio remaining at 342.

Like-for-like sales declined by 3.1% in the quarter driven by a weaker performance in seasonal sales. Big ticket sales continued to be impacted by a challenging market, although fitted
bedroom furniture continued to perform well benefiting from the rollout of the installation service and in-store displays. Bathrooms has also continued to perform well. Sales for the remaining categories were flat.

The flat gross margin performance was driven principally by the anticipated net impact of adverse currency and shipping rates offset by a sales mix impact.

Read the full trading statement in our 'Interesting Articles' section.

Source : HRG Press Release