Press Association
Sunday 12th February 2012
Home Retail Group said it has expected annual profits to exceed market hopes, despite a new year slide in sales at its Argos chain.
The retailer said profits were likely to be around £290 million in the year to February 27, slightly ahead of current City expectations.
Argos sales in the year rose 1.5% to £4.35 billion, including a 6.6% drop in the final eight weeks of the period after snow disruption and the later launch of its spring catalogue caused same-store sales to slump 9.4%.
At DIY chain Homebase, sales were flat at £205 million for the eight weeks to the end of February, down 0.6% on a like-for-like basis.
Across the year, Homebase sales were 3.9% higher at £1.57 billion.
Home Retail has also been battling the impact of the weak pound, which has increased the costs of imported goods and affected margins.
It has looked to offset the challenging trading conditions by keeping a tight control of costs.
Home Retail also increased its profits guidance in January, when it added £20 million to forecasts.
Home Retail shares rose 3% and helped a clutch of other retail stocks to make progress.
Seymour Pierce retail analyst Freddie George said like-for-like sales at Argos and the gross margin decline at Homebase were worse than expected, but Argos performed better than hoped on the margin front.
