Home Retail profit slides, scraps divi

Argos and Homebase owner Home Retail revealed a nine percent decline in like-for-like sales as pre-tax profit plunged 60 percent after particular weakness in consumer electronics.

The group, which operates 748 stores, has seen its share price sink 50% in the last year. Pre-tax profits fell to £90.2m in the year to 25 February while sales were down 6% to £5.58bn.

Cash gross margin fell 7% to £2.02bn while operating profits tumbled almost 60% to £94.2m.

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Home Retail said whilst it adopted a cautious trading approach during the year, spending in its markets declined more than initial estimates with many customers tightening their purse strings further amid continued pressure on disposable income for discretionary items.

As a result, the company said it will continue to plan cautiously for the 2012/13 financial year.

Home Retail also said with around 300 store lease renewals over the next five years, many stores could be closed or relocated.

"With around 300 store lease renewals or break clauses due over the next five years, representing nearly 30% of the store portfolio, this flexibility gives the group the ability to manage proactively the size of its store estate," it said in a statement.

Commenting on the group's trading performance chairman Oliver Stocken said, "While the group's performance in the short term cannot be immune from the economic environment, we continue to focus on its strategic advantages to ensure that it will be well positioned for the economic recovery over the long term."

The Board is not recommending the payment of a final dividend for the year. Therefore the full-year dividend is represented by the interim dividend of 4.7p.

Future dividends will be set at a level which is sustainable and which reflects the trading prospects and financial position of the group, the company said.

CJ