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Rain hurts Homebase as Argos sales pressure eases

Wet and windy weather buffeted trading at Homebase, with the DIY retailer suffering an 8pc fall in sales during a "particularly volatile" three months.

However, shares in Home Retail Group, owner of Homebase and Argos, jumped 27pc as pressure eased on sales at Argos. The launch of Apple's iPad 3 tablet provided some respite for the embattled retailer, catching out short-sellers who are betting that Argos will struggle to arrest four years of falling sales at the chain.

Home Retail on Tuesday revealed that sales at Homebase during the first quarter of the year had fallen 8.1pc to £421m. Like-for-like sales during the period slid 8.3pc, which the chain said was principally driven by sales of seasonal products - such as outdoor furniture - which represented around 40pc of total sales and sank 15pc due to the poor weather conditions.

Analysts had predicted that the terrible April weather would hurt Homebase. Last week, analysts at Espirito Santo pointed out that rainfall during the month was three times higher than last year and that rival B&Q had reported a near-11pc fall in like-for-like sales during a similar period to Homebase.

Sales at Argos eased 0.2pc to £819m during the first quarter of the year. But, the chain said it had witnessed an improved peformance in consumer electronics as demand for laptops and tablets such as Apple's iPad 3 offset a decline in sales of televisions and video gaming products. Argos said these markets "remained challenging".

The chain added that sales through its online 'check and reserve' service had grown 24pc while total internet sales rose 17pc and represented 41pc of total Argos sales.

Last month, Home Retail posted a 66pc slid in annual profits as a weak consumer electronics market hurt sales. Argos has been hit by competition from the internet as well as cash-strapped customers tightening their belts. John Walden, the chain's new chief executive has drafted in consultants to conduct a radical overhaul of the struggling retailer, which could close some of the company's 700 shops.

Terry Duddy, Home Retail's chief executive, said: "Over a particularly volatile trading period, Argos had a solid start to the year supported by its multi-channel performance, while at Homebase the poor weather conditions adversely impacted seasonal product sales."

"At this early stage of the financial year we are comfortable with current market expectations for full year benchmark profit. We will continue to plan cautiously, managing robustly both the cost base and the cash position of the Group while prioritising our investment in the ongoing development of our multi-channel capabilities," he added.

Source : Rachel Cooper – The Telegraph

19 June 2012
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