MILTON KEYNES (dpa-AFX) - Home Retail Group Plc (HOME.L, HMRLF.PK) Thursday said its trading for the first quarter ended June 1, 2013, has been consistent with its expectations, with marginal growth in Argos and Homebase sales. Looking ahead, the UK's home and general merchandise retailer expects consumer spending to remain subdued. The shares are currently down about 7 percent in the morning trade.
Terry Duddy, chief executive of the company stated, 'Argos has delivered a good start to the year driven by continued success in consumer electronics and electricals, supported by growing internet and mobile commerce sales. Overall, its trading has been consistent with our expectations.'
However, Homebase's seasonal sales were adversely impacted by volatile weather and its performance for the quarter was slightly behind the firm's expectations. The division had a positive like-for-like sales performance, the company said.
'Whilst we expect consumer spending to remain subdued, we are on track with delivering our investment plans to drive the long term development of both Argos and Homebase,' Duddy added.
Argos and Homebase are two of the UK's leading household goods brands.
In an interim management statement for the 13 weeks from March 3, to June 1, 2013, the company said total sales at Argos grew 1.2 percent to 828 million pounds. Net closed space reduced sales by 0.7 percent in the quarter, with store portfolio remaining at 737.
Like-for-like sales improved 1.9 percent, while gross margin was down about 75 basis points due to sales mix impact from growth in consumer electronics.
In Argos, consumer electronics maintained its positive sales performance, driven by higher sales in tablets and TVs. The company said it experienced market-driven declines in video gaming and audio categories. Total internet sales increased during the period.
In Homebase, total sales grew 0.2 percent to 422 million pounds. Net closed space reduced sales by 1.2 percent, with store portfolio remaining at 336. Like-for-like sales improved 1.4 percent in the quarter, helped by performance in big ticket products.
Sales were lower in seasonal products, representing nearly 40 percent of quarterly total sales, which were hurt by volatile weather conditions. Sales for the remaining categories were broadly flat.
The company said Homebase gross margin fell about 200 basis points, mainly due to return to a more normal level of promotional sales, compared to the unusually low level in the same quarter last year.
For the fiscal year ended March 2, 2013, Home Retail had reported a higher profit, despite lower revenues, reflecting a gain on employee benefits.
HOME.L is currently trading at 133.6 pence, down 10.5 pence or 7.29 percent, on a volume of 1.31 million shares.
Copyright RTT News/dpa-AFX
© 2013 AFX News
