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The week ahead: Homebase profits expected to drop by 50%

The harsh winter ­weather and the squeeze on household incomes have sent a chill through profits at DIY retailer Homebase.

When parent company Home Retail Group ­reports full-year results this week, it is expected to say that earnings at Homebase have crashed by nearly 50 per cent. The DIY chain is forecast to see profits fall from £23 million to £12 million, the ­second consecutive year that profits have dropped by about 50 per cent.

Peter Saville, partner at restructuring firm Zolfo Cooper, said: “Homebase is reliant on big-ticket ­purchases and continuing economic uncertainty and inflation pressure on ­disposable income means that, for many customers, such purchases remain on an indefinite hold.”

Last October, Homebase announced that it would invest in a new store format, online growth and new brands such as Habitat as part of a turnaround plan for the business. Its store in Ruislip was ­refitted in October last year and customer feedback has been “excellent”.

Pre-tax profit at Home Retail Group, which also owns Argos, is forecast to fall from £102 million to £90 million.

However, Argos itself is set to see earnings swell by £94 million to £101 million after a strong fourth quarter.

Source : Ravender Sembhy – The Express

28 April 2013
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