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Home Retail Group news


Full-Year Results

29 April 2009

Home Retail Group, the UK's leading home and general merchandise retailer, today announces its results for the 52 weeks to 28 February 2009.

Operating highlights

  • Strength of the operating model and good cost control helped mitigate the impact of a difficult market environment
  • Continued cash management focus throughout the Group led to another strong cash performance
  • Group sourcing scale and supply chain initiatives continued to support competitive customer pricing
  • Ongoing developments to the customer offer, adapting to their changing needs in challenging times
  • The internet now generates more than a quarter of Argos' sales, with continued transfer of skills to support the rapidly growing Homebase online offer
  • A net 23 Argos stores opened in the year, with Homebase opening a net 14 including the remaining nine stores previously acquired from Focus

Financial highlights

  • Total sales down 1% to £5,897m (2008: £5,985m), with like-for-like sales down 4.8% at Argos and down 10.2% at Homebase
  • Group gross margin down 81 basis points, with an approximate 100 basis point reduction at Argos and an approximate 25 basis point increase at Homebase
  • Total operating costs and distribution costs total increase of 1%, with underlying inflation of approximately 3% being largely offset by cost reduction actions
  • Benchmark operating profit1 down 25% to £300m (2008: £398m), with a decline of £73m or 19% at Argos and a decline of £30m or 67% at Homebase
  • Benchmark profit before tax2 down 24% to £328m (2008: £433m)
  • Basic benchmark earnings per share3 down 24% to 25.9p (2008: 33.9p)
  • Reported operating loss of £402m after exceptional charges of £694m, the majority being Homebase non-cash asset write downs and onerous lease charges
  • Reported loss before tax of £394m; reported basic loss per share of 47.7p
  • Cash generation of £110m; closing financing net cash position of £284m
  • Benchmark pre-tax return on invested capital4 of 12.0%
  • Final dividend of 10.0p recommended; full-year dividend held at 14.7p

Oliver Stocken, Chairman of Home Retail Group, commented:

"This has been a challenging year for the UK retail industry. While profit performance in the short term cannot be immune from the economic backdrop, the Group's underlying strengths will secure our continued longer term success. Delivering another year of net cash generation has been an excellent result and ensures we are well placed for the future."

Terry Duddy, Chief Executive of Home Retail Group, commented:

"In a particularly difficult trading environment, we have managed our costs and cash very effectively to limit the impact on profits. This focus has put us in an even better position to trade through another tough year while further improving our competitive position. We will continue to develop our broad product range, benefit further from our advantaged sourcing operations and invest in our multi-channel operations in order to strengthen our position as the UK's leading home and general merchandise retailer."

1. Benchmark operating profit is defined as operating profit before amortisation of acquisition intangibles, store impairment and onerous lease charges, exceptional items and costs related to demerger incentive schemes.
2. Benchmark profit before tax (benchmark PBT) is defined as profit before amortisation of acquisition intangibles, store impairment and onerous lease charges, exceptional items, costs related to demerger incentive schemes, financing fair value remeasurements, financing impact on retirement benefit balances, the discount unwind on non‑benchmark items and taxation.
3. Basic benchmark earnings per share (benchmark EPS) is defined as benchmark PBT less taxation attributable to benchmark PBT, divided by the weighted average number of shares in issue (excluding Home Retail Group shares held in its Employee Share Trust (EST)).
4. Benchmark pre-tax return on invested capital (benchmark pre-tax ROIC) is defined as benchmark operating profit plus share of post-tax results of joint ventures and associates, divided by year-end net assets excluding retirement benefit balances, tax balances and financing net cash/debt.

There will be a presentation today at 9.30 am to analysts and investors at the King Edward Hall, Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ. The presentation can be viewed live on the Home Retail Group website www.homeretailgroup.com. The supporting slides and an indexed replay will also be available on the website later in the day.

An Interim Management Statement, covering the first quarter's 13 weeks of 1 March 2009 to 30 May 2009, will be published on 11 June 2009.

Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements.

View the full PDF version of the Full-Year Results

Click here to view the webcast

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