Argos and Homebase owner shares fall on weak profits

Shares in Home Retail Group (HRG) have fallen 13% after annual profits dropped more than 60% as its Argos chain was hit by weak demand for electrical goods.Argos and Homebase owner shares fall on weak profitsFor the year to 25 February, HRG’s pre-tax profits were £90.2 million- down from £265.2 million the year before.

Operating profits at Argos sank 60% to £94.2 million and profits were also lower at HRG’s Homebase DIY stores.

HRG also scrapped its final dividend and said prospects for the current financial year were “uncertain”.

Trading is expected to remain difficult “as consumers’ disposable income is impacted by ongoing inflationary pressure, together with low levels of consumer confidence”, HRG chief executive Terry Duddy said.

Total sales across the group fell 6% to £5.49 billion.

Like-for-like sales at Argos – which strip out the impact of store openings and closures – fell 8.9%.

HRG said that Argos had been successful in markets such as laptops, tablets and homewares, but “this was more than offset by weakness in other product categories, most notably in consumer electronics”.

Most of the sales decline at Argos was down to falling demand for consumer electronics

It said the consumer electronics had seen “market decline of around 20% in the year and, excluding the growth in laptops and tablets, accounted for around 80% of the sales reduction in the year”.

At the Homebase DIY chain, like-for-like sales fell 2%, with operating profits down to £22.8 million from £47.6 million the year before.

HRG hinted that it could close some of its stores over the next few years, noting that it had about 300 store lease renewals or break clauses due in the next five years – about 30% of its outlets.

“This flexibility – gives the group the ability to manage proactively the size of its store estate,” the company said.

June 27, 2012 · Home Based Jobs · Comments Closed
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