Home Retail sees Argos and Homebase struggling - UPDATE

Like-for-like (LFL) sales at Home Retail Group's struggling Argos chain have taken another tumble in 2012, but the group says its 2011/12 results should still be in line with expectations.

Argos stores which have been open more than 12 months saw sales down 8.5% year-on-year in the eight weeks to February 25th, mainly because of weakness in the consumer electronics market.

The group managed to open one new store during the period while 12 closed, reducing the total portfolio to 748 stores.

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Internet sales were up "slightly" on the prior year and now account for 40% of revenues. Gross margins were flat.

The Homebase chain fared a little better, but still saw LFL sales down 6.5%. There was one closure during the period, reducing the store portfolio to 341.

The group says the problem for Homebase has been a weakness in "big ticket" items, like new kitchens, as consumers have seen their disposable incomes drop.

Homebase's gross margin did increase by 1.75 percentage points on stock management improvements.

"With trends in this short, low volume, trading period being broadly as we anticipated, group benchmark profit before tax for the 52-week period ended 25 February 2012 is expected to be in-line with current market expectations," revealed Terry Duddy, Home Retail's Chief Executive.

Shares in Home Retail were flat at 09:42. Over the past 12 months the stock has fallen 41%.

BS