Argos owner nudges up profit expectations after sales surgeThursday 13 March 2014 09.51
Britain's Home Retail Group said annual profit would be slightly above the top end of market forecasts after it delivered a much stronger-than-expected finish to the year at its Argos and Homebase businesses.
It said it expected group benchmark pretax profit to be "slightly ahead" of the top end of the current range of market forecasts of £107-111m.
In January the firm had guided to an annual profit towards the top end of forecasts of £90-109m.
Sales at household goods retailer Argos rose 5.2% at stores open over a year in the final 8 weeks of its fiscal year to March 1, well ahead of forecasts of 1.8%, driven by strong demand for electrical products like TVs and consoles.
Sales on the same basis at DIY chain Homebase rose 9.3%, also ahead of forecasts for a 3.4% rise, helped by growing sales of "big ticket" items like kitchens.
After a tough time of trading during the economic downturn, in which underlying pretax profit shrank to £91m in its fiscal 2013 year from £433m years before, the group began implementing a turnaround plan aimed at pushing Argos sales up 15% to £4.5 billion by 2018.
The company is reinventing Argos, which makes around 70% of group revenue, from a catalogue firm to a digitally-led business, targeting higher sales from tablets and mobiles and hoping to cash-in on its easy in-store collection offering. Homebase stores are also being revamped.
Internet sales for the full-year represented 44% of total Argos sales, up from 42% a year ago.
Home Retail said in a response to a review regarding the sale of Payment Protection Insurance (PPI) to its customers in the UK, the group expects to increase its provision for customer redress by £25m.
It would not say what the total amount was but added that the charge would be an exceptional item.
Home Retail in January named Argos boss John Walden as its new chief executive. Its shares are up about 58% on a year ago.