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Home Retail Group: a disappointing quarter

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Home Retail Group, the owner of Homebase and Argos, today released its Q2 financial update. 

It was bad news for Argos as total sales declined by 0.4% to £897m and like-for-like sales declined by 2.8%. Much of this was driven by the continued decrease in the sale of electrical goods such as TVs and tablets. 

At the same time, the Group has continued its expansion of Argos’ presence. The store portfolio was increased by 52 to a total of 840 stores, including 44 digital concessions within Homebase and 8 digital concessions within Sainsbury’s.  

Internet sales represented 46% of total sales at Argos this quarter: an increase of 2% from the same period last year. Mobile commerce sales increased by 11% and now represent 25% of total sales at Argos. 

John Walden, Chief Exec of Home Retail Group, said: “Consistent with our previous guidance, Argos’ sales continued to be adversely impacted by the performance of a number of key electrical product categories as well as weaker overall market conditions in August.” 

He did however praise the “encouraging early results” of the Argos concessions, which will continue to spread. 

Sales at Homebase also declined. The Group blamed its ongoing store closure plan for the 2.8% decrease: eight stores closed this quarter, reducing the portfolio to 271.  

Like-for-like sales on the other hand increased by 5.9% across all product categories, but particularly big ticket products. This growth was supported by trade transfer and stock clearance resulting from the closure of stores and distribution centres, which turned many big ticket items into bargains for customers. 

“Homebase performed well across its peak trading season, delivering good like-for-like sales growth in both quarters of the first half, while continuing its progress on both its store closure programme and the Productivity Plan more broadly.” Walden continued. 

“The outcome for the Group’s full-year generally depends upon the important Christmas trading period at Argos which, this year, seems less predictable than usual due to a less certain promotional environment. Our teams have made solid progress preparing for this period, including substantially completing the technology and operational steps necessary to introduce new store collection and home delivery propositions to our customers. We will be making increased marketing and promotional investments to launch these propositions and we expect customers to increasingly embrace them over time.” 

 

Published on Thursday 10 September by Philip Gallagher

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