Home Retail Q2 Results Hit by Poor Weather

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LONDON -- Home Retail Group  (LSE: HOME.L  ) , owner of Argos and Homebase, this morning saw its shares drop around 3% at the time of writing after releasing its Q2 trading statement, down to 96.70 pence after having closed yesterday at 99.40 pence.

The U.K.'s leading home and general-merchandise retailer announced that total sales at Argos were up 1% on Q1 figures, to 867 million pounds from 819 million pounds, while like-for-like sales increased 1.4%. 

Net closed space reduced sales by 0.4% as seven stores closed in the quarter, reducing the store portfolio to 739; however, Q1 saw net closed space increase sales by 0.4%, so the results evened each other out for the H1 total.

The story wasn't quite so favorable at Homebase, however. Total sales declined by 3.9% to 366 million pounds, while like-for-like sales declined by 3.7% in Q2. Similar to rival B&Q, whose owner Kingfisher released its interim results yesterday, sales of seasonal products such as BBQs were hit by record wet weather in the quarter.

The chief executive of Home Retail Group, Terry Duddy, said:

Argos has had a solid first half of the year supported by its multi-channel performance, while at Homebase seasonal product sales continued to be adversely impacted by the poor weather conditions.  At this stage, we expect to deliver full-year Group benchmark profit in line with current market expectations but, as always, the outcome will depend upon trading at Argos in its peak Christmas period.  While we continue to plan cautiously we approach our peak trading period in good operational shape.

Since the financial crisis began, shares in Home Retail have collapsed by around 80%, suffering as consumers focus their spending on essentials and investors, therefore, buy up defensive stocks. However, with positive news coming from Europe and the ECB last week, some analysts believe that this may really be the beginning of the end of the eurozone crisis. If markets go on a bull run, then, the likes of Home Retail could be set to reach their pre-recession heights. 

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