UK's Home Retail year profit falls again
LONDON (Reuters) - Home Retail (HOME.L), Britain's biggest household goods retailer, posted a fifth straight fall in annual profit, as its customers continued to bear the brunt of the economic downturn.
The owner of Argos stores and the Homebase DIY chain said on Wednesday it made an underlying pretax profit of 91 million pounds ($141.6 million) for the year to March 2.
Though that was in line with company guidance and analysts' consensus forecast of 90 million pounds, it was 10 percent down from the 102 million pounds made in the 2011-12 year, which itself was a 60 percent fall on 2010-11.
Group sales were broadly flat at 5.48 billion pounds.
Many British retailers have been finding the going tough as consumers battle a prolonged squeeze in household incomes.
Home Retail has been particularly hard hit because its mainly low-income customers have suffered most and because it faces intense competition from specialist stores, supermarket chains such as Tesco (TSCO.L) and online retailers like Amazon (AMZN.O).
Though operating profit at the 737-store Argos business rose 6.5 percent to 100.3 million pounds, it was still under half the 219 million pounds made in the 2010-11 year.
It has, however, delivered three quarters of like-for-like sales growth, driven by robust demand for tablet PCs.
That has raised hopes a transformation plan, launched in October, to reinvent Argos from a catalogue-led business to a digitally-led business is starting to work.
The plan is targeting a 15 percent rise in sales by 2018 with a focus on online, mobile and tablet transactions.
At the 336-store Homebase business operating profit more than halved to 11 million pounds.
The chain has struggled as constrained consumer finances has meant delayed home improvement projects, while weather patterns have also been unhelpful.
"Our view of the 2013/14 financial year is that it will remain similar to 2012/13 with consumer spending continuing to be impacted by ongoing inflationary pressures and low levels of consumer confidence," Home Retail said.
However, it said it was still in a strong financial position, ending the period with net cash 396 million pounds and paying a full-year dividend of 3.0 pence, down from 4.7 pence last time.
Shares in Home Retail, up 43 percent over the last six months, closed Tuesday at 160.1 pence, valuing the business at 1.3 billion pounds. (Reporting by James Davey, Editing by Paul Sandle and Brenda Goh)