13 weeks to 28 May 2016
The latest results for Home Retail Group are only available to subscribers.
52 weeks to 27 February 2016
Key Numbers - Group• Sales down 1 per cent to £5,668m; flat at Argos, down 3 per cent at Homebase• Operating and distribution costs decreased by £21m to £1,887m, Argos costs increased by £22m, Homebase costs decreased by £44m• Benchmark profit before tax decreased by 28 per cent to £94.7m• Basic benchmark earnings per share decreased by 28 per cent to 9.3p• The recommended offer from J Sainsbury plc for the purchase of Home Retail Group plc resulted in an exceptional goodwill impairment charge of £852m, leading to a total loss after tax of £808m• Year-end cash balance of £623m• Cash gross margin down 3 per cent to £1,978mArgos – operating highlights• Completed the national roll-out of market leading Fast Track propositions for both same-day home delivery and store collection• Opened 94 digital concessions and collection points, taking the total number to 114• Total of 177 digital stores, representing 21 per cent of the Argos store estate• Internet transactions accounted for 49 per cent of total Argos sales, including mobile commerce which grew by 10 per cent to represent 28 per cent of total sales
It’s been a landmark year for Home Retail Group that saw the successful sale of Homebase for £340m completed on 27 February 2016, with £337m received in FY16 and the balance received in FY17. The Board also recommended an offer from J Sainsbury plc for the purchase of Home Retail Group plc. Total sales in the 52 weeks to 27 February 2016 were broadly flat at £4,095m. Net space increased sales by 2.6 per cent with the store estate increasing by a net 90 stores to 845. Like-for-like sales declined by 2.6 per cent, principally driven by a decline in sales of electrical products, such as TVs, tablets and white goods, partially offset by growth in mobiles. The decline in electrical sales were partially offset by growth in toys, sports equipment and furniture. The gross margin rate decreased by approximately 50 basis points, principally driven by an increased level of promotional sales.Internet sales grew 7 per cent during FY16 and represented 49 per cent of total sales, up from 46 per cent last year. Within this, mobile commerce sales grew by 10 per cent to represent 28 per cent of total sales, up from 25 per cent in the prior year. Fast Track Delivery offers customers c.20,000 products for same-day home delivery, with the choice of four time slots per day. Orders can be placed until 6pm for same-day delivery by 10pm, 7 days per week, at a standard cost of £3.95. To make this offer available to customers throughout the UK, Argos currently employs c.2,300 colleagues as customer fulfilment drivers for its dedicated fleet of c.500 vans. Argos has spent the last two and a half years enhancing the systems and operational capabilities that underpin its product fulfilment, including improving its real-time stock visibility and stock picking systems, and implementing its ‘hub & spoke’ distribution network on a national scale.
John Walden, Chief Executive of Home Retail Group, commented: "The past year has been a landmark period for the Group, during which we have completed the sale of Homebase and recommended to shareholders the offer from J Sainsbury plc for the acquisition of the remaining Group, principally Argos. I am pleased that, with its offer for Home Retail Group, Sainsbury’s has recognised the good progress we have made in transforming Argos into a digital retail leader."
8 weeks to 27 February 2016
Argos• Total sales rose +1.9 per cent to £515m• LFL sales fell -1.1 per cent• Gross margin movement up c. 75bpsHomebase• Total sales down -5.2 per cent to £434m• LFL sales up +3.3 per cent• Gross margin movement down c. 225bps
Summary: Argos Total sales at Argos increased by 1.9 per cent to £515m. Net new space contributed 3.0 per cent, principally as a result of the 94 digital concessions and collection points opened within the past year. The store estate has increased by a net 90 stores to 845 in the year. Like-for-like sales declined by 1.1 per cent in the period, however the cannibalisation impact on like-for-like sales as a result of the additional new space was around 1 per cent and therefore underlying like-for-like sales were broadly flat in the period.Sales of non-electrical product categories grew during the period, principally attributable to the performance of furniture and general sports, partially offset by a decline in jewellery. However, sales of electrical products declined during the period, principally driven by video gaming, tablets and white goods, while mobiles continued to deliver good levels of growth.Internet sales grew by 13 per cent in the period and represented 51 per cent of total Argos sales, up from 46 per cent for the same period last year. Within this, mobile commerce sales grew by 15 per cent to represent 28 per cent of total Argos sales, up from 25 per cent in the prior year.Argos’ gross margin was up approximately 75 basis points.
John Walden, Chief Executive of Home Retail Group, commented: "This has been another rather eventful period for the Group, during which we completed the sale of the Homebase business and both J Sainsbury plc and Steinhoff International Holdings N.V. announced possible offers for the acquisition of the remaining Group."I am pleased with the continued improvement in Argos’ sales performance in the period, together with the continued progress in the Argos Transformation Plan to become a digital retail leader. In October we introduced FastTrack - market-leading propositions for same-day home delivery and store collection. Since its introduction, customer awareness of FastTrack has continued to grow and its operations are improving, with both on-time delivery rates and customer satisfaction now at leading levels. Along with FastTrack, the combination of our now proven digital concession model, together with improvements in digital experiences have driven increases in both digital sales and digital participation."
18 weeks from 30 August 2015 to 2 January 2016
Argos• Total sales rose +0.9 per cent to £1,837m• LFL sales fell -2.2 per cent• Gross margin movement down c. 225bpsHomebase• Total sales down -4.0 per cent to £434m• LFL sales up +5.0 per cent• Gross margin movement down c. 50bps
Summary: Argos Total sales at Argos in the period grew by 0.9 per cent to £1,837m. Net new space contributed 3.1 per cent, principally as a result of 95 digital concession stores in Homebase and Sainsbury’s stores added within the past year. In the recent trading period the store portfolio increased by a net 4 stores to 844. Like-for-like sales declined by 2.2 per cent in the period.On a category basis, like-for-like sales in electrical products continued to decline, principally driven by declines in video gaming, tablets and white goods, partially offset by good growth in mobiles. Argos achieved positive like-for-like performances in a number of non-electrical product categories such as toys, freetime and furniture, while sales in homewares and jewellery declined. Black Friday had a disproportionate effect on Argos trading patterns during the period. Argos performed well over the Black Friday period, achieving total sales growth of 41 per cent on Black Friday itself, its highest ever sales day, and 23 per cent growth during the week of Black Friday. Digital sales increased by 45 per cent for the same week, with digital participation accounting for 62 per cent of total Argos sales in the week versus 52 per cent last year. Consumer enthusiasm for Black Friday resulted in sales shifts from both the weeks before and after the event. Furthermore, during December, Argos experienced a 13 per cent reduction in traditional store walk-in sales, exacerbated in high-street and shopping centre stores, while digital sales overall increased 10 per cent during this same period.For the entire reporting period, Internet sales grew 9 per cent and represented 53 per cent of total sales, up from 49 per cent last year. Within this, mobile commerce sales grew by 9 per cent to represent 31 per cent of total Argos sales, up from 28 per cent in the prior year. Summary: HomebaseTotal sales at Homebase declined by 4.0 per cent to £434m as a result of the ongoing store closure programme, with a net 6 store closures in the period, resulting in a total of a net 31 store closures year to date - reducing the portfolio to 265 stores. Closed space reduced sales by 9.0 per cent in the quarter.Like-for-like sales increased by 5.0 per cent in the quarter with sales growth broadly across all product categories, but particularly in big ticket kitchen and bathroom products. This growth continued to be partially supported by both the trade transfer and the stock clearance sales benefits attributable to the previously announced store closure programme and distribution centre closure.
John Walden, Chief Executive of Home Retail Group, commented: “This has been a very eventful period for the Group. Argos traded through a challenging market while launching significant new propositions. During the period we also commenced and progressed discussions for the sale of Homebase to Wesfarmers Ltd., and received an approach from J Sainsbury plc for the potential acquisition of the Group.“Against this backdrop, whilst Argos trading performance was mixed, I am pleased that we made material steps forward in the Argos Transformation Plan. Total sales at Argos increased 0.9 per cent. They were affected by volatile trading patterns resulting from particularly strong sales during Black Friday week, a shift in consumer demand from both the weeks before and after Black Friday, growth in digital transactions, reduced store footfall particularly on the high streets, and the continuing effects of price deflation. Argos like-for-like sales decreased 2.2 per cent in the period, while new digital concession locations added in the past year contributed 3.1 per cent to growth."