Home Retail Group has posted its FY results to 27th February 2016, which incorporate the sale of Homebase and look ahead to the imminent sale of the Argos business to Sainsbury's.
Total sales were broadly flat at £4095m, while LFL sales declined by 2.6% – principally driven by a decline in sales of electrical products, but partially offset by growth in toys, sports equipment and furniture. The store estate increasing by a net 90 stores to 845.
Total operating and distribution costs increased by £22m, principally driven by cost increases as a result of the Transformation Plan’s initiatives, including the new stores added and the introduction of Argos’ new Fast Track propositions. Benchmark operating profit declined by £46.1m – or 36% – to £83.1m.
John Walden, chief executive, comments: “The past year has been a landmark period for the group, during which we have completed the sale of Homebase and recommended to shareholders the offer from J Sainsbury plc for the acquisition of the remaining group, principally Argos. I am pleased that, with its offer for Home Retail Group, Sainsbury’s has recognised the good progress we have made in transforming Argos into a digital retail leader.
“During the year we continued to progress the Argos Transformation Plan, including the introduction of Fast Track, which offer market-leading propositions for both same-day home delivery and store collection. We have been encouraged by the customer response to Fast Track with our on-time delivery rates and customer satisfaction having continued to improve to leading levels. Argos also now has a proven digital store model, including small formats and concessions, which require lower capital outlay and provide customers with fast access to an expanded product range regardless of store stock capacity.
“Finally, the group ended the year with a cash balance of £623m, which is significantly stronger than previously anticipated. With leading digital capabilities, new Fast Track propositions, proven and flexible digital store formats and strong financial resources, we are well positioned for an exciting future.”
A total of 177 digital stores, representing 21% of the Argos store estate, was reported. Internet transactions accounted for 49% of total Argos sales, including mobile commerce which grew by 10% to represent 28% of total sales.
Sales were down 1% to £5668m – flat at Argos, down 3% at Homebase, which was sold for £340m on 27th February.