Home Retail issues profit warning on Black Friday uncertainty
Argos owner Home Retail Group warned its full-year profits will fall short of expectations due to trading uncertainty caused by Black Friday.
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The FTSE 250 group said its performance in the first half of the year had been “mixed”, as a decline in pre-tax profits at Argos offset a rise in profits at Homebase.
In the six months to 29 August, pre-tax profits at Argos tumbled 47% year-on-year to £6.4m, while Homebase profits rose 23% to £34.3m.
Overall benchmark profit rose 10% to £34.1m, while group sales declined 2% to £2.6bn and the group warned the implementation of the National Living Wage will cost approximately £15m next year.
Sales at Argos declined 1.5% to £1.7bn, as the retailer expanded its stores by 85, while like-for-like sales fell 3.4%.
Meanwhile, Homebase, which closed 271 stores in the period, saw sales decline 2.2% year-on-year to £816m, while like-for-like rose 5.6%.
“Homebase delivered a good first half and also made good progress with its productivity plan and the store closure plan in particular, which helped Homebase to achieve further cost reductions,” said group chief executive John Walden.
“We look forward to an improved sales performance for both Argos and the group in the second half.
“However, trading at Argos during this year’s important Christmas season seems less predictable than usual, as both retailers and customers determine whether to repeat last year’s unusual Black Friday patterns.”
Home Retail shares were down 13.29% to 129.80p at 0843 BST on Wednesday.