UK-based home and general merchandise retailer Home Retail Group Plc (HOME.L,HMRLF.PK) Thursday said its second-half like-for-like sales fell 8.7 percent at Argos and declined 3.7 percent at Homebase.
However, chief executive Terry Duddy expects group benchmark profit before tax for the year ended February 25, 2012 to be in-line with current market expectations, stating that the trends in this short, low volume, trading second-half period have been broadly as anticipated.
In Argos, total sales in the half year decreased 7.7 percent to 2.2 billion pounds. Homebase total sales also dropped 3.6 percent to 670 million pounds. Argos and Homebase are two of the UK's leading brands.
For the 8-week period ended February 25, Argos total sales slid 7.7 percent to 480 million pounds. Like-for-like sales declined 8.5 percent, mainly driven by continued weakness in the consumer electronics market, while total internet sales showed marginal growth. The gross margin rate was flat with last year.
Homebase sales for the period were 195 million pounds, down 6.2 percent from the year-ago period. Like-for-like sales declined 6.5 percent, hurt by continued weakness in big ticket sales. Gross margin improved about 175 basis points, driven mainly by stock management benefits.
For the pro forma 52-week period to February 25, 2012, the company sees benchmark profit before tax on par with market expectations, despite Argos sales for the period shedding 7.7 percent and Homebase sales slipping 2.6 percent. The 53rd week ended March 3 is expected to contribute nearly 15 million pounds of additional benchmark profit before tax.
Looking ahead, the company said it will continue to manage robustly its cost base and cash position.
In January this year, Home Retail said it anticipates a significant cut in dividend for the current financial year, citing the ongoing uncertainty surrounding the UK economy. The company had plans to close a number of Argos stores in 2011 as leases reach their expiry date.
Home Retail is scheduled to announce its full-year results on May 2.
HOME.L is currently trading at 115.2 pence, up 0.17 percent, on a volume of 1.08 million shares on the LSE.
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by RTT Staff Writer
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