Home Retail, which operates Argos and Homebase, is being hit by "economic uncertainty and a low level of consumer confidence", says chairman Oliver Stocken. Tough consumer conditions were certainly evident in these figures.
Argos struggled the most; like-for-like sales dropped 5.6 per cent year on year, fuelled by a slump in demand for large-ticket items such as furniture. Argos's gross margin fell 100 basis points and its operating profit slipped 18 per cent to £219m. Managing director Sara Weller is stepping down in June, purely for personal reasons - she'll be temporarily replaced by group chief executive Terry Duddy.
Like-for-like sales at Homebase also fell, declining 0.3 per cent compared with a 2.7 per cent rise a year earlier, with growth only really evident in big-ticket items. However, operating profits managed to increase 16 per cent to £47.6m, mainly due to cost savings. Still, management don't expect much improvement and forecast low-to-mid single-digit percentage falls in like-for-like sales at Argos and a flat outcome at Homebase.
UBS expects current-year pre-tax profit of £195m and EPS of 16.9p.
HOME RETAIL GROUP (HOME) | ||||
|---|---|---|---|---|
| ORD PRICE: | 218p | MARKET VALUE: | £1.77bn | |
| TOUCH: | 217-218p | 12-MONTH HIGH/LOW: | 300p | 189p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 337p* | NET CASH: | £259m | |
| Year to 26 Feb | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 5.61 | 297 | 21.6 | 13.0 |
| 2008 | 5.98 | 426 | 34.0 | 14.7 |
| 2009 | 5.90 | -394 | -47.7 | 14.7 |
| 2010 | 6.02 | 293 | 23.4 | 14.7 |
| 2011 | 5.85 | 265 | 21.3 | 14.7 |
| % change | -3 | -10 | -9 | - |
Ex-div: 18 May Payment: 20 Jul *Includes intangible assets of £1.6bn, or 203p a share | ||||
