Home Retail Group's annual profits fall on flat sales

Home Retail Group reported a fall in annual profits as a drop in sales at its Homebase subsidiary offset strong results at Argos.

Benchmark profit before tax for the year to March 2nd declined 10% to £91m compared to 2012, on the back of flat sales of £5.47bn.

Argos revenue rose 1.5% to £3.9bn, driven by its strong multi-channel performance and high demand for consumer electronics.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Multi-channel sales penetration accounted for 51% of total sales of Argos while internet sales contributed 42%. The company's website and app visits increased by 24% with mobile shopping now representing 10% of total sales.

The group plans to invest further in the retailer's online offering.

Homebase revenue dropped 5.2% to £1.4bn as adverse weather affected seasonal product sales and difficult market conditions hit big ticket categories. Multi-channel sales penetration increased to 5.0% of total sales with reserve and collect sales growing by 27% and website visits increasing by 23%.

The division will undergo store refits and accelerated multi-channel capability to draw in customers.

Argos and Homebase both achieved market share growth.

The parent company ended the year a net cash position of £396m. A full year dividend of 3.0p per share was recommended, down from the previous year's 4.7p.

"This was an encouraging year with both businesses growing their market shares," said Chief Executive Terry Duddy.

"Argos delivered like-for-like sales growth for the first time in five years and multi-channel sales broke through the 50% threshold. Our strong financial position enables Argos to deliver on its transformation plan to become a digital retail leader, and for Homebase to invest in the rollout of its new proposition."

RD