Home Retail has Mixed Fortune in Sales

Posted on 22 June, 2012 by Kirsten Kennedy

The launch of the iPad 3 has hugely boosted electronics sales in UK retail commercial properties this week, with consumers flocking to Argos to get their hands on the latest must-have gadget.

In fact, Argos bosses are hoping that the recent spate of iPad sales is an indicator of the troubled retailer’s fortune changing. Argos commercial properties suffered an 8.7 per cent decline in the previous two financial quarters to April this year, largely due to the double dip recession creating a dip in the electronics retail industry. Additionally, high street competitors have become increasingly popular and have somewhat pushed the catalogue commercial property chain into the shadow with offers and money saving incentives.

However, parent company Home Retail faces much bigger problems than a dip in its Argos sales revenue, as the other commercial property chain in its portfolio shows no signs of improvement. Homebase commercial properties, which specialise in DIY products, saw an 8.3 per cent drop in like-for-like sales in this financial quarter, compared to Argos’ 0.2 per cent dip in the three months leading up to June 1st.

This could be put down to the wet start to the summer that we have experienced so far – seasonal items such as barbecues and gazebos, which usually boost Homebase’s sales at this point in the calendar, account for around 40 per cent of in store sales in the 341 commercial properties in the UK. However, these dropped by 15 per cent, leaving a significant deficit in the commercial property chain’s sales targets.

Yet Home Retail boss Terry Duddy remains optimistic that the action packed summer for Britain, kicked off by the Olympic Games, will have a positive effect on sales in his group’s two commercial property chains.

He says; “One of the things that may be coming through here is a bit of a feel good factor as far as consumers are concerned – people are getting out there and continuing to enjoy themselves.”

Also, he maintains that Homebase performed well in the past quarter when compared to rival commercial property chains such as Kingfisher owned B&Q. Indeed, there is truth in his claims, as B&Q revealed a 12 per cent slump in sales, putting the disappointing performance down to decreased demand for outdoor products and building materials.

The news comes as a welcome relief to struggling Argos, as Home Retail were forced to close two commercial property stores in the last financial quarter, bringing the number of commercial properties in the chain down to 746. However, Duddy has refused to entertain the thought of selling more of the chain’s commercial properties, claiming that the high street presence supports online sales and that only seven of the commercial properties in the portfolio are loss-making.

Keith Bowman, equity analyst at Hargreaves Lansdown, praised Argos’s recent sales performance, saying; “Sales at Argos have significantly exceeded forecasts.

“Against expectations for a fall of around 4 per cent, a decline of 0.2 per cent has pleased, led by laptop and tablet sales. The Argos Check & Reserve service has again contributed, with internet sales growing in importance.

“Furthermore, as expected, Homebase was impacted by the weather, although margins have also surprised to the upside, aided partly by management measures.”




2 responses to “Home Retail has Mixed Fortune in Sales”

  1. Dean B says:

    Hello, I want to say that this article is awesome, greatly written and includes approximately all important info.

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