Home Retail sales beat expectations

11th Jun 2009 07:01

Home Retail Group said both Argos and Homebase enjoyed better than expected sales in the quarter and grew market share.Total sales at Argos grew by 0.9% in the 13 weeks ended 30 May to £937m, while like-for-like sales declined by 2.8%. Good growth continued in consumer electronics as a whole, and toy sales were strongly ahead, though the furniture and homewares markets continued to be challenging. Home Retail continues to expect that the impact of adverse currency movements on the gross margin rate will increase through the course of the year. A 75 basis point gross margin decline in the quarter was driven mainly by the sales mix, it added.Total sales at Homebase grew by 5.8% to £465m and were up 3.8% on a like-for-like basis.Seasonally-related categories account for around 40% of first quarter sales and saw low double-digit growth; the weather patterns resulted in the year-on-year demand being particularly strong in March and April but down year-on-year in May. Kitchen sales continued to be strong during the quarter. Sales for the remaining categories overall were marginally lower than the first quarter last year.The approximate 250 basis point gross margin decline was driven mainly by the sales mix and an increased promotional stance. "Homebase in particular saw its performance in gardening and outdoor products benefit from the excellent weather conditions," said chief executive Terry Duddy."At this early stage of the financial year we continue to plan cautiously, with our trading focus remaining on driving cash gross margin and achieving further cost efficiencies."