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Home Retail Group Q2 trading update

Home Retail Group, the UK’s leading home and general merchandise retailer, today updates on the trading of its second financial quarter covering the 13 weeks to 31 August 2013.

NB - for the full trading statement please visit our Industry Articles pages:

Total sales at Argos grew by 2.4% to £889m. Net closed space reduced sales by 0.3% in the quarter with the store portfolio remaining at 737.

Like-for-like sales increased by 2.7% in the quarter. Growth was driven by strong sales in
seasonal products which benefited from favourable weather conditions; this combined with continued growth in electricals, more than offset sales declines in furniture and homewares.

Sales via the internet continued to grow with internet penetration now representing 44% of
total Argos sales, up from 42% for the same period last year. This growth was supported by strong sales in mobile commerce, which saw sales grow by 133% to 17% of total Argos sales, up from 7% for the same period last year, driven by the ongoing development of Argos’ mobile and tablet apps.

The approximate 50 basis point gross margin decline was driven principally by the sales mix impact from the growth in electricals.

Total sales at Homebase grew by 9.3% to £400m. Net closed space reduced sales by 1.7% in the quarter; three stores closed in the quarter reducing the store portfolio to 333.

Like-for-like sales increased by 11.0% in the quarter driven by strong sales of seasonal
products, which represent c.40% of total sales in the quarter and which benefited from favourable weather conditions. Big ticket sales performance was also slightly ahead while sales in the remaining categories were slightly down.

The gross margin rate was level with the same period last year.

Terry Duddy, Chief Executive of Home Retail Group, commented:

“The Group had a good first half driven by a positive sales performance in both businesses.

Overall Homebase traded well through its peak period, while Argos continues to build on its digital leadership with mobile commerce now accounting for 17% of Argos’ total sales. At this stage of the financial year, we expect to deliver full year Group benchmark profit in line with current market expectations but, as always, the outcome will depend upon Argos’ peak trading period.

Whilst we continue to expect consumer spending to remain subdued, we approach the important Christmas trading period in good operational shape. We are on track to deliver the investment plans which will drive the long term development of both businesses.”

Source : Home Retail Group

12 September 2013
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