UK multi-channel home and general merchandise giant Home Retail Group said Wednesday it should meet its pre-tax profit target for the year – if …
UK multi-channel home and general merchandise giant Home Retail Group said Wednesday it should meet its pre-tax profit target for the year – if its star brand Argos performs well in the Christmas trading period. The upbeat news came as the retailer also announced it is to close 25% of its 323 Homebase stores. The move is part of three-year turnaround plan for the DIY retailer it described as “too large relative to the demands of the UK market and changing digital shopping patterns”.
Over 80 stores will now shutter, many as leases end, with up to 30 stores closing in the next six months. The managing director of Homebase, Paul Loft, will also step down when a successor is found.
That news came as Home Retail reported Wednesday a 5% decline in H1 pre-tax profit to £13.5m ($21.8m), from £14.2m a year ago. The retail group blamed higher operating expenses and exceptional costs of £11.8m for the dip.
Underlying profit for the period, however, rose 13% to £30.9m, below analysts’ expectations of £34.6m.
Revenue for the period to August 30 rose to £2.668bn from £2.592bn last time. Same-store sales grew 2.9% for Argos and by 4.1% for Homebase.
Chief executive John Walden, said: “”The successful delivery of the Argos transformation plan over its remaining three years continues to be the group’s strategic priority and its greatest potential source of shareholder value. Homebase is a good business with the basis for future growth.
“In this context, Homebase will pursue a three-year plan through to the end of FY18 to improve the productivity of its store estate, strengthen its propositions and accelerate its digital capabilities by leveraging Argos’ investments.
“This will position Homebase as a smaller but stronger business, ready for investment and growth.”