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The week ahead: Home Retail Group to report

Terry Duddy, the long-standing boss of Argos and Homebase owner Home Retail Group, will present his last set of figures for the on Thursday before he hands over the reins on March 14.

Mr Duddy, who will be succeeded by Argos managing director John Walden, is expected to bow out with another strong sales performance for the two retailers, having recently emerged as a festive winner after Argos enjoyed its best Christmas for 10 years.

The catalogue chain saw like-for-like sales jump 3.8% in the 18 weeks to January 4, with 46% of all sales made over the internet. Online trade was boosted by its popular check and reserve service allowing shoppers to collect items in store as well as a surge in the use of smartphones and tablets, accounting for a fifth of all sales.

Retail experts are forecasting little drop off in sales momentum in the fourth quarter, with Numis Securities pencilling in comparable sales growth of 3% for the eight weeks to the end of February.

Home Retail is also seen posting more robust figures for its DIY business Homebase as buoyant housing market conditions continue to drive sales. Homebase delivered a better-than-expected result over Christmas, with same store sales up 4.7% thanks to strong demand for “big ticket” items and Numis expects growth to have held up since, easing only slightly to 4%.

However, profit margins suffered in both its chains over Christmas, as consumer electrical and big ticket items are less profitable for the group.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, cautioned both divisions could again report reduced profit margins.

Source : Holly WIlliams - EADT

10 March 2014
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