Homebase sales drop 1.4%

Published:  10 June, 2010

MILTON KEYNES: Sales at Homebase, part of home and general merchandise retailer Home Retail Group, declined by 1.4% to £459m in the first quarter.

In an interim statement issued today covering the 13 weeks from 28 February to 29 May 2010, Home Retail Group, which also owns Argos, reported worsening sales in the first quarter as consumers pared spending.

Like-for-like sales at Homebase declined by 1.4% in the quarter and declined 8.1% at Argos outlets open at least a year.

Terry Duddy, chief executive of Home Retail Group, said: "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.

The statement said that seasonal-related categories at Homebase performed well, with sales held broadly flat in the period; this compared to double-digit growth last year when Spring 2009 weather conditions were particularly favourable.

Big-ticket sales at Homebase were level on last year, supported by new product ranges and installation services. Sales for the remaining categories were marginally negative, the company said.

Mr Duddy said: "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."

Andrew Hughes, an analyst at UBS AG said: "The focus in the near-term is likely to remain on Argos. Homebase has started the year better than expected." Hughes rates the stock "neutral".

Home Retail shares fell almsot 5% in early London trading and were down 8.8 pence, or 3.7%, to 229.2 pence at 08:00 this morning. This year its shares have fallen19% compared with a 5.6% decline in rival Kingfisher, owner of B&Q.

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