Financial performance

Home Retail Group operates with a clear scale advantage derived from a well invested infrastructure which has been built up over a period of many years.

The following information relates to the 2011/12 financial year, and is on a 52-week proforma basis, ending 25 February 2012, unless otherwise stated.

Operating highlights

Ongoing investment initiatives in both businesses to maintain leadership in multi-channel retailing:
- Argos multi-channel sales penetration increased to 48% of total sales with online Check & Reserve still the fastest growing channel
- Argos is the second largest internet retailer in the UK with over 430 million site visits
- Argos mobile shopping has grown threefold to represent 6% of total sales by year-end
- Homebase multi-channel sales penetration increased to 4% of total sales
Ongoing development and growth in own-brand and exclusive product strategies in both businesses
Argos store refurbishment continues to deliver sales uplifts ahead of plan
Extension of Argos online product offering
Third consecutive year of market share gains at Homebase
Improved ranges across Homebase big ticket categories with award winning installation services
Acquired the exclusive use of the Habitat UK brand; introduction of Habitat product into both Argos and Homebase businesses during 2012

Financial highlights

Sales down 6% to £5,492m
Cash gross margin down 7% to £2,027m
Robust management of costs with operating and distribution costs broadly flat at £1,930m, with the impact of both underlying cost inflation pressures and the investment in new initiatives having been offset by further costs savings
Benchmark operating profit¹ down 61% to £98m; Group operating margin of 1.8%
Benchmark profit before tax² down 60% to £102m
Basic benchmark earnings per share³ down 59% to 8.7p
Closing net cash position at 25 February 2012 of £181m
Full-year dividend of 4.7p, no final dividend recommended
For the 53 weeks to 3 March 2012, sales down 5% to £5,583m and benchmark profit before tax² down 54% to £116m. Reported profit before tax of £104m. Reported basic earnings per share of 9.1p. Closing net cash position at 3 March 2012 of £194m. The 53rd week contributed £14m of additional benchmark profit before tax² and £13m of additional cash

Notes

¹ Benchmark operating profit is defined as operating profit before amortisation of acquisition intangibles, store impairment and onerous lease charges or releases and exceptional items.
² Benchmark profit before tax (benchmark PBT) is defined as profit before amortisation of acquisition intangibles, store impairment and onerous lease charges or releases, exceptional items, financing fair value remeasurements, financing impact on retirement benefit obligations, 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 shares held in Home Retail Group's share trusts net of vested but unexercised share awards).