Home Retail Group stung by mixed performance between brands
10 June 2010 09:45
Home Retail Group has seen its Homebase division outperform its Argos chain, as the slump in the video games market led to a bigger-than-expected slide in sales. Home Retail Group said Argos sales were down 8.1% on a like-for-like basis, leading to a 5.2% drop in revenues to £889 million in the 13 weeks to May 29th. It said consumers had been reluctant to spend due to economic uncertainty, with the video games market particularly hit after a strong performance last year and television sales down despite the forthcoming World Cup.
Freddie George, a retail analyst at Seymour Pierce stockbrokers, said the Argos figures were "disappointing and quite lot worse than expected."
He added: "The company has had two poor quarters with the like-for-likes almost double-digit down. Competition, we believe, is intensifying particularly from the food retailers ramping up their internet offer and effort."
At Homebase, like-for-like sales declined by 1.4% and by the same level on an overall basis to £459 million.Terry Duddy, chief executive of Home Retail Group, commented: "Economic conditions remain both challenging and uncertain, with this quarter proving difficult in terms of consumers' willingness to spend. The comparable period last year also contained some strong sales growth and share gains in certain product categories, particularly in consumer electronics at Argos. For Homebase, this quarter represented a good outcome to its peak trading period.
"We continue to drive cash gross margin, further cost efficiencies and our increased investment plans. At this early stage of the financial year, we are targeting to achieve a similar level of profitability to last year."
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