Home Retail Group Q1 2015-16 trading statement
Total sales at Argos declined by 2.6% to £846m. Net new space contributed 1.3% with the store estate increasing by a net 33 stores to 788. This net increase comprised a total of 35 new stores which included 32 digital concessions within Homebase, two digital concessions within Sainsbury’s, one small format digital store together with two store closures.
Like-for-like sales declined by 3.9% in the quarter. As anticipated, sales in electrical products declined, principally driven by market declines in TV’s, computers and tablets, partially offset by growth in sales of mobiles.
Internet sales for the quarter represented 44% of total Argos sales, up from 42% for the same period last year. Within this, mobile commerce sales grew by 15% to represent 25% of total Argos sales, up from 21% in the prior year.
The approximate 50 basis point gross margin improvement was driven by the anticipated impact of favourable currency and shipping costs together with the timing benefit of a small number of other positive items which are expected to reverse later in the current financial year. These increases were partially offset by an increased level of promotional sales.
Total sales at Homebase declined by 1.6% to £438m. Closed space reduced sales by 7.0% with 17 store closures in the quarter, reducing the store portfolio to 279.
Like-for-like sales increased by 5.4% in the quarter with sales growth across big ticket, seasonal and the remaining product categories. This growth was partly supported by both the trade transfer and the stock clearance sales benefits attributable to the previously announced distribution centre and store closure programme.
The approximate 175 basis point gross margin decline was principally driven by the adverse impact of the previously discussed stock clearance activity together with an increased level of promotional sales.
“John Walden, Chief Executive of Home Retail Group, commented: The performance at Argos in the quarter was broadly in line with both our expectations and previous guidance, with sales being adversely impacted by market declines in key electrical and seasonal product categories. Homebase has made a good start to the year, successfully annualising a strong like-for-like sales performance last year. We continue to expect that sales will be challenging during the first half at Argos, but we look forward to a stronger second half as we progress the Transformation Plan and introduce new propositions more broadly to the market.”