DIYWEEK.net

Despite continued store closures knocking Homebase's total sales for the quarter, like-for-like (LFL) figures were positive, boosted particularly by big-ticket lines.
Homebase closed eight stores during the 13 weeks to August 29, bringing its store portfolio to 271. This ongoing store closure programme contributed to a 2.8% decline in total sales for quarter to £378m.

However, LFL sales increased by 5.9%, with sales growth broadly across all product categories, but particularly in big-ticket products. This growth continued to be partially supported by both the trade transfer and the stock clearance sales benefits attributable to the store closure programme and distribution centre closure.

The stock clearance activity had a negative impact on gross margin, which saw a decline of approximately 75 basis points. This was also affected by an adverse sales mix impact, mainly attributable to the growth in margin dilutive big ticket products. These declines were partially offset by a reduced level of promotional activity together with the anticipated impact of favourable currency and shipping costs.

Home Retail Group stablemate Argos reported a total sales decline of 0.4% to £897m during the quarter. Net new space contributed 2.4%, with the store portfolio increasing by 52 stores to 840. This increase comprised 44 digital concessions within Homebase and eight digital concessions within Sainsbury's.

Like-for-like sales declined by 2.8% in the quarter, impacted by an anticipated decline in sales of electrical products principally driven by TVs, tablets and white goods.

Internet sales for the quarter represented 46% of total Argos sales, up from 44% for the same period last year. Within this, mobile commerce sales grew by 11% to represent 25% of total Argos sales, up from 22% in the prior year.

The approximate 125 basis point gross margin improvement was principally driven by the anticipated impact of favourable currency and shipping costs. These increases were partially offset by an increased level of promotional sales.

Home Retail Group chief executive John Walden said of the results: "Argos delivered an improved sales performance in the second quarter. It made good progress with new stores, opening more than 50 digital concessions within Homebase and Sainsbury's, which have generated encouraging early results. Consistent with our previous guidance, Argos' sales continued to be adversely impacted by the performance of a number of key electrical product categories as well as weaker overall market conditions in August.

"Homebase performed well across its peak trading season, delivering good like-for-like sales growth in both quarters of the first half, while continuing its progress on both its store closure programme and the Productivity Plan more broadly.

"The outcome for the Group's full-year generally depends upon the important Christmas trading period at Argos which, this year, seems less predictable than usual due to a less certain promotional environment. Our teams have made solid progress preparing for this period, including substantially completing the technology and operational steps necessary to introduce new store collection and home delivery propositions to our customers. We will be making increased marketing and promotional investments to launch these propositions and we expect customers to increasingly embrace them over time."