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Home Retail's return to FTSE a disappointment

Published: 23 December 2008
Shares in Argos and Homebase parent company drop 13% to 204p after a six month absence due to concerns over level of discounting.
Home Retail's return to FTSE a disappointment
The drop on Home Retail Group's first day entering trading was the company's worst performance with investors worried about the impact its promotional activity will have on margins.

Both Argos and Homebase are offering as much as 50% off in their latest round of discounts, rousing concerns that the group has been left with too much stock and its profits will be hit this year.

With the recent trend for discounting that we've seen, Singer Capital Market analyst Matthew McEachran and Pali International analyst Nick Bubb believe the margin performance of UK retailers could be the worst on record.

Research revealed that 82 per cent of the 100 largest retailers are discounting and will continue in the run up to Christmas.

Mr Bubb warned that by mid January spending would drop back down to the awful levels seen in October. "If you thought the current level of discounting on the high street is unprecedented and that the rising number of retailing bankruptcies is unparalleled, then just wait until January..."

DIY chain B&Q has announced that it will offer 50% off all kitchens and bathrooms from 7am to Christmas Eve, both instore and online. Discounts of up to 75% will be available on other selected items.

A number of other retailers, including Asda and Currys are expected to start their sales online on Christmas Day, rather than the traditional Boxing Day.


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