Home Retail profits jump 53% in first half as Argos and Homebase sales grow

Sales at Home Retail were up 3% to £2.6bn while like-for-likes increased 2.3% at Argos and 5.9% at Homebase. It was the best like-for-like performance for Homebase since its acquisition in 2002.

Argos’ benchmark operating profit rocketed 136% to £7.7m. Total sales were up 1.8% to £1,7bn. Online sales accounted for 43% of Argos’ total revenue, with mobile surging 124% to account for 16% of total sales.

Homebase benchmark operating profit jumped 11% to £27.2m. Total sales were up 4.4% to £822.3m at the DIY retailer.

Home Retail chief executive Terry Duddy said: “The group has had a good first half with both businesses delivering successive quarters of positive sales performance and market share gains. 

“Argos performed well and recorded its fifth consecutive quarter of like-for-like sales growth. It has continued to grow its internet sales, powered by the growth in mobile commerce. Homebase traded strongly through its peak trading period, and has now achieved 18 consecutive quarters of market share growth in the shed sector.

“We continued to manage costs well, taking action to mitigate cost growth from sales-related increases, underlying cost inflation and investment in strategic initiatives.  As a result, we were able to hold costs broadly flat year on year.  Cash performance was also good with the group generating £16m of cash in the period to close the half with net cash of £412m, which supports the group’s ability to fund the investment plans in both businesses.

“Both Argos and Homebase are making good progress with their investment plans, and remain on track to deliver their long-term strategic objectives. 

“The Argos transformation is well underway, including the introduction of new smartphone and tablet apps, the extension of the ‘hub & spoke’ trial, the launch of a digital Christmas gift guide and the development of digital concept stores. 

“Homebase has completed five store refits, and plans to complete around 10 further refits in the current financial year. These refitted stores are performing in line with our expectations. In addition, the introduction of improved delivery options has supported multichannel sales participation, which grew by 28%. 

“As we look ahead to the second half of the year, we expect consumer spending will remain subdued, and whilst some macroeconomic indicators are improving, these have not yet led to an increase in household disposable income.  Overall we are making good progress and are in excellent operational shape as we approach the key Christmas trading period.”

Argos’ transformation plan includes repositioning its channels for a digital future; providing more product choice, available to customers faster; developing a customer offer that has “universal appeal”; and operating a leaner and more flexible cost base.

Since year end Argos unveiled a new partnership with eBay, whereby the etailer wil trial a collection service in 150 Argos stores.