Home Retail Group says summer-related products sold well, with Homebase sales up 9.3% over peak period
Home Retail Group received a boost from Britain’s heatwave in the second quarter as the hot weather drove increased sales of summer-related products at both Homebase and Argos.
The company said Homebase traded well through its peak period, with total sales up 9.3% at £400m in the 13 weeks to 31 August. Like-for-like sales at the DIY retailer rose by 11% after seasonal products and big-ticket items sold well, sharply beating market expectations.
Three Homebase stores were closed during the quarter, reducing the portfolio to 333.
Argos also achieved growth during the quarter with total sales up 2.4% at £889m. Like-for-like sales rose 2.7% helped by demand for seasonal products and electricals which offset sales declines in furniture and homewares. Internet transactions accounted for 44% of Argos sales, up from 42% in the same period last year.
The chief executive, Terry Duddy, said the FTSE 250 group was in line to meet market expectations in the full year but warned “as always, the outcome will depend upon Argos’s peak trading period”.
He added: “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.”
A £14.1m cash payment was made to the Home Retail Group Employee Share Trust during the period, to fund the purchase of 10m shares.
Freddie George, analyst at Cantor, said: “We still believe it will be a challenge for Argos, in particular, to improve earnings markedly even with a cyclical upturn. Homebase, although it had good figures, also looks structurally challenged. B&Q, which lost market share in the period, is likely to retaliate.”
Duddy revealed last week that he will step down next year after the leading the group for 15 years. A search for his successor is under way.
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