DIY chain Homebase enjoyed a 3.8% rise in like-for-like sales in the first quarter – a £465m increase – as the warm weather encouraged us to spend more time outdoors. A few rays of sunshine struggle through the clouds, and it would seem the average British person is suddenly gripped with an insatiable urge to tear through their garden like a hyperactive mole, while frantically loading up their barbecues with meat. That's great for Homebase’s parent company Home Retail Group – but with rising unemployment and the weak pound likely to depress figures for the rest of 2009, it’s not breaking out the celebratory patio furniture just yet.
Still, this is undeniably good news for HRG, particularly after its recent travails. The group, which also owns Argos, had a shocking 2008: sales took a hammering across the board, plunging more than 10%. Argos is down 2.8% this year too - but Home Retail Group said this was better than expected, given that homewares continue to feel the pinch from the property market slowdown. And this summer appears be looking a bit brighter on all counts, with Homebase in particular reporting of strong sales in ‘seasonally related categories’ like outdoor equipment and barbecues. Thanks partly to three new store openings, Homebase’s total sales were up 5.8%.
However, HRG’s head honchos aren’t getting carried away – not least because Easter promotions pushed Homebase’s gross margin down by 2.5%. With the weakness of the pound likely to put pressure on margins for the rest of 2009, CEO Terry Duddy said his focus would be ‘on driving cash gross margin and achieving further cost efficiencies.’ You can’t blame him for being a touch cautious: in 2008, profits slumped by 24% as consumers cut back on their spending, forcing HRG to shelve £50m of investment in new stores.
One notable fact about Homebase’s results today: sales of kitchenware have also seen a decent-sized boost. Presumably that’s because people need somewhere to grill their sausages once it inevitably starts to rain.
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