Spring sales droop at Home Retail Group

Home Retail Group, which runs Homebase and Argos, has seen sales fall in the 13 weeks from 28 February to 29 May 2010.

Argos sales fell 8.1 per cent to £889m, while Homebase sales fell 1.4 per cent to £459m.

Chief executive Terry Duddy said:

"Economic conditions remain both challenging and uncertain, with this quarter proving difficult in terms of consumers' willingness to spend. The comparable period last year also contained some strong sales growth and share gains in certain product categories, particularly in consumer electronics at Argos. For Homebase, this quarter represented a
good outcome to its peak trading period.

"We continue to drive cash gross margin, further cost efficiencies and our increased
investment plans. At this early stage of the financial year, we are targeting to achieve a
similar level of profitability to last year."

He added that total sales at Homebase declined by 1.4% to £459m. Net space contribution was flat in this period; two stores closed in the quarter, reducing the portfolio to 347. It is anticipated that the space contribution will be marginally negative over the next twelve months.

Like-for-like sales declined by 1.4% in the quarter. Seasonal-related categories performed
well, with sales held broadly flat in the period; this compared to double-digit growth last year
when Spring 2009 weather conditions were particularly favourable. ‘Big ticket' was also level
on last year, supported by new product ranges and installation services. Sales for the
remaining categories were marginally negative.

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