Home Retail Group chief executive John Walden commented: “We are pleased to have delivered another full-year of like-for-like sales growth in both Argos and Homebase. Although our sales performance was weaker in the final short trading period, we managed the business effectively during this period and achieved a good performance in both gross margin and costs. As a result of this, we expect that Group benchmark profit before tax for the FY15 financial year will be towards the top end of the current range of market expectations of £120m to £132m.”
He added: “We are on track to deliver both the Argos Transformation Plan and the Homebase Productivity Plan over the next three years.”
Total sales at Argos declined by 4.0% to £505m in the period, with like-for-like sales declining by 5.0%. This trading performance, Home Retail Group says, was in part due to annualising a 5% like-for-like sales growth in the same period last year, together with the impact of a more difficult market in a number of consumer electronic product categories.
Full-year internet sales represented 46% of total Argos sales, up from 44% last year. Within this, mobile commerce grew by 38% to represent 25% of total Argos sales.
The report added that like-for-like sales at Homebase declined by 0.9% in the period, total sales declined by 4.7% to £193m and net closed space reduced sales by 3.8%. Full-year total sales declined by 0.7%, like-for-like sales increased by 2.3% and net closed space reduced sales by 3.0%. There were 30 store closures and three store openings in the year, reducing the store portfolio by 27 stores to 296.
Senior market analyst at www.finspreads.com Fiona Cincotta commented: “Home Retail Group announced a weaker than forecast end to 2014 at both its Argos and Homebase chains, and the start to 2015 does not look so promising either. Like for like sales at Argos, the largest chain within the group, fell by a massive 5% against expectations of a 0.2% fall in the eight weeks to the end of February. Homebase saw a fall on the same measure of 0.9% compared to an expected fall of 0.4%.
“The drop in sales has been attributed to weakened demand for video games and TVs and is expected to remain weak,” she added. “It would seem that the Argos brand needs an overhaul and some serious strategic decisions to be taken in order to get back onto a more positive standing. Despite the CEO saying that the drop in Argos sales had moderated, the market was clearly not impressed. Shares in Home Retail Group dropped a staggering 10% in early trading as investors rushed to get out of a stock whose future looks shaky at best.”