Home Retail hikes profit guidance again after strong fourth quarter

After signalling higher-than-expected full-year profits earlier in the year, Home Retail, the owner of Argos and Homebase, further raised its guidance on Thursday after reporting a strong end to its financial year.

After signalling higher-than-expected full-year profits earlier in the year, Home Retail, the owner of Argos and Homebase, further raised its guidance on Thursday after reporting a strong end to its financial year.

The company said that the final eight weeks of the financial year ended March 2nd have been a "good outcome to a challenging year".

Profit before tax is now expected to come in at £90m for the year as a whole. This follows the company's statement in January which said that the figure would be £10m ahead of the current (at the time) market consensus of £73m.

Furthermore, Home Retail said that its net cash position has increased by around £200m on the year to £395m, well ahead of the previous guidance for cash "in excess of £300m".

An improvement in like-for-like (LFL) sales growth at both Argos and Homebase in the final eight weeks of the year has boosted the full-year growth rates.

ArgosTotal sales at Argos rose by 4.3% in the eight-week period to £501m despite two stores having closed. With the closed space reducing the top line by 0.9 percentage points, sales were up 5.2% on a LFL basis. This compares with the 2.7% increase seen in the third quarter, pushing the full-year LFL growth rate to 2.1%.

The company hailed its increasing exposure to the internet, with online penetration increasing to 43% of total Argos sales, up from 40% a year before. This was helped by the mobile commerce channel where sales surged by 117% year-on-year.

Terry Duddy, Chief Executive Officer of Home Retail, said: "Against a backdrop of subdued consumer spending for the new financial year, we will continue to invest and are focussed on delivery of the transformation plan to reinvent Argos as a digital retail leader and the Homebase proposition.

HomebaseSales at Homebase fell 2.8% to £191m during the eight-week period, though this division was also impact by reducing selling space after one store closed. The LFL change year-on-year was -1.5%.

Full-year LFL sales fell by 4.9%, though this was an improvement from the 5.4% year-to-date decline registered at the end of the third quarter.

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021