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UK DIY News

Homebase half year results

Homebase half year results covering the 26 weeks to 1 September 2012:

Sales: £787.3m (26 weeks to 27 August 2011: £839.6)
Benchmark operating profit £24.5m (2011:£29.9m)
Benchmark operating margin 3.1% (2011:3.6%)

FINANCIAL REVIEW
Total sales decreased by 6.2% to £787m, however Homebase continued to grow share in the DIY shed market. Net space sales change was flat with one store closure reducing the store portfolio to 340. LFL sales declined by 6.2%.

Seasonal product sales were adversely impacted by poor weather conditions, while big ticket sales were lower overall reflecting the continuing challenging market.

Total operating and distribution costs decreased by £7m with the impact of underlying cost inflation pressures being more than offset by further cost savings. Benchmark operating profit was £24.5m, a £5.4m or 18% decline on the comparable period last year.

OPERATIONAL REVIEW

EXTENDING MULTICHANNEL:
Internet sales participation has grown by 25% y-o-y to almost 5% of Homebase’s total sales. Within this, Reserve and Collect sales grew 31% to comprise 1.5% of Homebase’s total sales while website visits increased by 20% over the same period last year.

In July, Homebase launched a refreshed website to bring it in line with the new brand styling and to provide richer online content with the customer feedback being very positive.

Following the launch of Habitat in Homebase, a ‘shop by brand’ page has been created on the main Homebase website allowing customers to easily navigate and purchase key brands including Habitat, Laura Ashley, Odina, Schreiber, Qualcast and Jamie Oliver. In October 2012, Homebase launched a web platform for mobile devices.

As part of Homebase’s social media development, in May the first ever Homebase Facebook app was launched, allowing the creation of personalised mood boards and enabling customers to ‘ask an expert a question’. Homebase posts on Facebook have been viewed over 1.5m times in the period.

DEVELOPING THE STORE PORTFOLIO:
Following the success of the new store proposition in Aylesford, the next evolution of this concept is due to open in the Ruislip store at the end of October 2012. The learnings from Aylesford have been used to improve the proposition which now also includes Habitat and Laura Ashley concessions. Following Ruislip, two further stores are expected to be re-fitted before the end of the financial year and seven mezzanine refreshes are also planned.

Homebase has continued its programme of garden centre refits, which incorporate inspirational garden displays to provide ideas, supported by practical advice from knowledgeable colleagues. Eleven refits were completed in the period, bringing the total number to 33.

Over the next five years Homebase has around 65 store lease renewals or break clauses due. Store profitability will be appraised as each of these fall due and the store network will be improved by closing, relocating or downsizing some older stores and opening some new stores if attractive sites become available. In the current financial year, it is expected there will be around five store closures, but no new store openings are planned.

DEVELOPING RANGES:
Habitat products are now available in over 200 Homebase stores, including ranges in furniture, paint, wallpaper and tiling. Habitat gives the Homebase customer greater choice with premium quality, contemporary styling, as well as some iconic designs that have been best sellers for many years. Habitat ranges will continue to develop and evolve through ongoing range reviews.

LOYALTY PROGRAMME:
Now into the third year, Nectar continues to be a key driver of customer loyalty for Homebase, giving access to 7.2 million Nectar customers. Nectar has a sales participation rate of over 60% of total Homebase sales.

Source : Home Retail Group
www.homeretailgroup.com/news-and-media/news.aspx?smlbus=1690&article=4548

24 October 2012
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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

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Martin Elliott. Chief Executive - Home Hardware.
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