Shares of Home Retail Group Plc (HOME.L,HMRLF.PK) rose about 11 percent Thursday morning on the London Stock Exchange as the company lifted its full-year benchmark profit before tax outlook and reported 4.3 percent growth in Argos sales for the final eight-week period for financial year ended March 2, 2013.
For the year, the UK-based home and general merchandise retailer expects benchmark profit before tax to be around 90 million pounds, up from the prior outlook 83 million pounds.
On January 17, the company forecast full-year benchmark profit before tax to be about 10 million pounds ahead of market consensus of 73 million pounds, citing good operational management and cash generation over the peak trading period.
Terry Duddy, chief executive stated, "This has been a good outcome to a challenging year with Group benchmark profit before tax now expected to be around £90m, and our net cash position increasing by approximately £200m to around £395m. Against a backdrop of subdued consumer spending for the new financial year, we will continue to invest and are focussed on delivery of the transformation plan to reinvent Argos as a digital retail leader and the Homebase proposition."
In its end of year trading statement, the company said its total sales at general merchandise unit Argos in the 8-week period grew 4.3 percent to to 501 million pounds. Like-for-like sales increased 5.2 percent, while gross margin was down about 75 basis points, mainly driven by sales mix impact from improved performance in consumer electronics.
According to the company, consumer electronics continued to deliver an improved sales performance driven by strong growth in tablets, which together with further growth in white goods and core electricals, more than offset weaker trading in homewares. Total sales at Homebase declined 2.8 percent to 191 million pounds. Like-for-like sales dropped 1.5 percent, while gross margin improvement was up about 50 basis points. Net closed space reduced sales by 1.3 percent, and one store was closed in the period.
For the full year, the company posted Argos sales totaling 3.93 billion pounds, up 1.5 percent from last year. Like-for-like sales improved 2.1 percent from a year ago. At Homebase, annual sales fell 5.2 percent to 1.43 billion pounds. Like-for-like sales were down 4.9 percent.
HOME.L is currently trading at 146.5 pence, up 13.6 pence or 10.23 percent, on a volume of 4.4 million shares on the LSE.
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