Fine weather brings good results for firms

Jun 12 2009 by Iain Laing, The Journal

FINE weather and price cutting have helped struggling DIY chain Homebase to like-for-like sales growth for the first time in two years.

Its owner Home Retail Group said a sunnier March and April – compared with last year’s rain – helped demand for gardening and outdoor equipment, which generates around 40% of first-quarter sales.

While May’s weather was poorer, Homebase grew same store sales by 3.8% in the three months to May 30 as the chain also sacrificed margins with a more aggressive promotional stance.

The better-than -expected sales performance was also matched by Home’s other chain, Argos. Like-for-like sales fell 2.8% – a lower decline than the 4% feared by the City.

Argos said it saw good growth in consumer electronics and strong toy sales, although furniture and homewares markets remain challenging.

Chief executive Terry Duddy said: “Argos and Homebase each enjoyed better than expected sales in the quarter and grew market share.

“Homebase in particular saw its performance in gardening and outdoor products benefit from the excellent weather conditions.”

Homebase, which has 348 stores, has been hindered by poor weather for the past two years as well as the onset of recession.

During the last financial year, like-for-like sales at the chain fell more than 10% and Home Retail was also forced to write off £542m from the value of the business.

The more upbeat figures come after rival Kingfisher last week said its B&Q chain doubled retail profits and grew comparative sales by 3.2% during the first quarter. Meanwhile, margin declines were lower at Argos, which grew overall sales by 0.9% to £937m despite the like-for-like decline. Analysts suggested the firm could be benefiting from struggles elsewhere on the high street.

Singer’s Matthew McEachran said: “Toy sales were strongly ahead, suggesting that Argos has been picking up ex-Woolworths sales.” But Home Retail also warned that the impact of the weaker pound on margins at both Argos and Homebase will increase as the year goes on.