Reuters: Hot Stocks: UPDATE 2-Cold spring hits Home Retail's Argos

Reuters: Hot Stocks Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 2-Cold spring hits Home Retail's Argos Jun 13th 2013, 11:19 Thu Jun 13, 2013 7:19am EDT * Argos underlying sales up 1.9 pct, missing forecasts * Homebase underlying sales up 1.4 pct but profits squeezed * Shares drop more than 10 percent (Adds more reaction, updates shares) By Paul Sandle LONDON, June 13 (Reuters) - Home Retail Group, Britain's biggest household goods retailer, was hit by disappointing first quarter sales of outdoor toys and garden furniture at its Argos chain, sending its shares down 10 percent on Thursday. Sales at Argos stores open more than a year grew 1.9 percent in the 13 weeks to June 1, missing a consensus market forecast of 3 percent and raising doubts about its turnaround plan which is supposed to make it better able to compete against supermarkets and online rivals. In the previous eight-week trading period sales at Argos had grown 5.2 percent. The company said the cold weather had hit seasonal sales of outdoor toys, barbecues, garden furniture and lawn mowers, both at Argos and its home improvement chain Homebase. "Seasonal categories have been a lot weaker than we expected them to be, not surprisingly given the poor start to the seasonal trading period," Chief Executive Terry Duddy told reporters. "It was a reversal of the difficult spring last year, where actually March was much better and this year it snowed." There was stronger demand for tablet computers and TVs but the higher sales of less profitable electronics hit Argos's gross margin - a measure of profitability - which was down by about 0.75 percent of a point. Shares in Home Retail, which have more than doubled over the last year after slumping in 2011, were at a three-month low, down 10.1 percent at 129.5 pence, valuing the group at 1.06 billion pounds ($1.7 billion). Analysts at Bernstein said they doubted Home Retail would meet sales targets set out in the Argos turnaround plan, given the first quarter performance and tough comparisons for the rest of the year. MARKET SHARE GAIN Cold weather was blamed for the biggest fall in Britain's retail sales in April for a year, when the Office for National Statistics published data last month showing sales volumes down 1.3 percent. Home Retail laid out a plan last year to reinvent the 737-store Argos chain for the digital age, replacing its laminated catalogues with touch-screens and targeting a 15 percent rise in sales to 4.5 billion pounds by 2018 as well as mid-single-digit operating margins. The group will focus its stores increasingly on product pick-up and customer service for transactions managed online or through mobile devices, aiming to attract more shoppers and reverse five years of falling profits. Online sales made up 42 percent of Argos's total sales, helped by a doubling of sales on mobile devices, which accounted for 14 percent of the total, Finance Director Richard Ashton said. At Homebase, Britain's second largest home improvement firm behind Kingfisher's B&Q, underlying sales grew 1.4 percent, slightly less than the company had expected, it said. Underlying sales at Homebase have fallen for the previous four quarters and the company engaged in more promotional activity than a year ago but this dragged the gross margin down by 200 basis points, which was not expected by analysts. The retailer now expects full year gross margin for Homebase to be down around 50 basis points having previously hoped it would be flat. ($1 = 0.6375 British pounds) (Editing by Kate Holton; editing by Tom Pfeiffer and Elaine Hardcastle) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions