Home Retail quarterly sales decline at Argos and Homebase

Home merchandise retailer Home Retail registered a decline in sales in its Argos and Homebase division in the first quarter.

A decline in electrical product sales, mainly TVs, tablets and computers, saw total sales in Argos dropped 2.6% year-on-year to £846m in the 13 weeks to 30 May, while like-for-like sales declined 3.9%, the FTSE 250 group said.

Total Homebase sales fell 1.6% from the corresponding period in 2014 to £438m, although like-for-like revenue increased 5.4%, driven by sales growth across big ticket, seasonal and the remaining product categories.

Group chief executive John Walden said Argos’ performance was in line with expectations and added Homebase had made a successful start to the year.

"We continue to expect that sales will be challenging during the first half at Argos, but we look forward to a stronger second half as we progress the transformation plan and introduce new propositions more broadly to the market," he said.

However, despite the company’s transformation plans, analysts warned the outlook remained bleak, with thin profit margins being the main cause of concern.

“Whilst Home Retail continues to evolve, group prospects remain clouded,” said Keith Browan, equity analyst at Hargreaves Lansdown

“Profit margins are thin, with Argos battling giants such as Amazon, while Homebase rivals such as B&Q are not standing still.”

Home Retail shares were up 0.38% to 160.10p at 08:31 on Thursday.