Further signs of weakness in the UK high street emerged this morning in the shape of a second-quarter trading statement from Home Retail Group (LON:HOME), although the firm’s shares increased by more than seven per cent by mid-morning.
The firm’s Argos catalogue shopping business saw overall sales decline by 7.1 per cent to £859 million during the quarter, when compared with the same period last year. Like-for-like sales (which exclude figures from new stores) were down 8.6 per cent.
For H1 2012 as a whole (which covers the 26 weeks to 27 August) sales by Argos amounted to £1.7 billion – a decline of 7.6 per cent.
DIY and home furnishings business Homebase fared a bit better, with Q2 2012 sales down 3.8 per cent at £382 million, with like-for-like sales down 3.1 per cent. H1 2012 sales at Homebase were £840 million – a decline of 1.8 per cent.
Home Retail blamed the decline at Argos on a weak consumer electronics market, although laptops continued to perform strongly. Meanwhile, Internet penetration remained strong – with 34 per cent of Argos’s total sales coming online (up from 32 per cent last year).
The firm said that “big ticket” sales at Homebase continued to be affected by a challenging market, although fitted bedroom furniture and bathrooms continued to perform well.
According to Terry Duddy, Home Retail’s chief executive, the firm’s performance during Q2 was in line with expectations and Home Retail’s shares responded well to the trading update. Its shares were up 7.4 per cent at 124 pence by 10:02am today, although the shares hit lows of 115 pence recently.
“Whilst continuing to plan cautiously, we are in good operational shape as we approach the Christmas trading period,” added Duddy. “We continue to develop and invest in our customer proposition across the businesses.”
Broker Seymour Pierce said this morning it had upgraded Home Retail’s shares from ‘sell’ to ‘hold’.