Home Retail Group announces its results for the 26 weeks to 29 August 2015

Milton Keynes, UK, 2015-10-21 — /EPR Retail News/ — Home Retail Group, the UK’s leading home and general merchandise retailer, today announces its results for the 26 weeks to 29 August 2015.

Operating highlights

  • Argos Transformation Plan progress:
    • Substantially completed development and testing of new digital propositions – Fast Track Collection and Fast Track Delivery – which launched early in the second half of FY16
    • Opened 86 digital concessions, bringing total digital stores to 148
    • Internet penetration accounted for 45% of total sales including mobile commerce which grew 13% to represent 25% of total sales
  • Homebase Productivity Plan progress:
    • A further 25 store closures completed
    • Infrastructure cost reduction programme accelerated
    • 43% digital sales growth to 10% of total sales

Financial highlights

  • Sales down 2% to £2,629m
  • Cash gross margin down 1% to £973m
  • Operating and distribution costs decreased by £10m to £941m, Homebase costs decreased by £26m, Argos costs increased by £14m
  • Benchmark profit before tax2 increased by £3.2m or 10% to £34.1m, Homebase increased by £6.5m, Argos decreased by £5.6m
  • Basic benchmark earnings per share3 increased by 13% to 3.4p
  • Reported profit before tax increased by 73% to £23.4m; reported basic earnings per share of 2.3p
  • Cash utilisation in the period of £116m with closing net cash of £193m
  • Interim dividend of 1.0p (H1 FY15: 1.0p)

John Walden, Chief Executive of Home Retail Group, said:

“While Group benchmark profit before tax increased slightly during the first half, performance overall was mixed. Homebase delivered a good first half, with like-for-like sales growth and an improvement in operating profit. It also made good progress with its Productivity Plan and the store closure plan in particular, which helped Homebase to achieve further cost reductions.

“Argos’ first half sales and profit were negatively impacted by declines in both electrical and seasonal product categories. Argos continued to make good progress with its Transformation Plan, delivering strongly against its digital store opening programme. Argos also substantially completed the technology and operational steps necessary to launch ‘Fast Track’ – its new home delivery and store collection propositions. Argos is investing significantly in the launch of Fast Track and although the rate of customer take-up cannot be certain, we are confident that customers will increasingly embrace this market leading service over time.

“We look forward to an improved sales performance for both Argos and the Group in the second half. However, as I have previously stated, trading at Argos during this year’s important Christmas season seems less predictable than usual, as both retailers and customers determine whether to repeat last year’s unusual Black Friday patterns. The combination of this trading uncertainty, an increased level of investment in the launch of Fast Track and the underlying profit reduction from Argos’ challenging first half, mean that at this stage of the financial year we expect the Group’s full-year benchmark profit before tax to be slightly below the bottom end of the current range of market expectations of £115m to £140m.”

1. Benchmark operating profit is defined as operating profit before amortisation of acquisition intangibles, post-employment benefit scheme administration costs, store impairment and onerous lease charges or releases and costs or income associated with store closures and exceptional items.

2. Benchmark profit before tax (benchmark PBT) is defined as profit before amortisation of acquisition intangibles, post-employment benefit scheme administration costs, store impairment and onerous lease charges or releases and costs or income associated with store closures, exceptional items, financing fair value remeasurements, financing impact on post-employment benefit obligations, the discount unwind on non-benchmark items and taxation.

3. Basic benchmark earnings per share (benchmark EPS) is defined as benchmark PBT less taxation attributable to benchmark PBT, divided by the weighted average number of shares in issue (excluding shares held in the Home Retail Group share trust net of vested but unexercised share awards).

There will be a presentation today at 9.30am to analysts and investors at the Auditorium, Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ. The presentation can be viewed as a live webcast on the Home Retail Group website www.homeretailgroup.com. The supporting slides and an indexed replay will also be available on the website later in the day.

A Trading Statement, covering the 18 weeks from 30 August 2015 to 2 January 2016, will be published on Thursday 14 January 2016.

Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements.

Contact Info
Home Retail Group
489-499 Avebury
Boulevard
Saxon Gate West
Central Milton Keynes
MK9 2NW