Magazine article Management Today

Behind the Spin: Home Retail Group

Magazine article Management Today

Behind the Spin: Home Retail Group

Article excerpt

The dilemma

You may not have heard of Home Retail Group, but you've surely made a trip or two to its retail chains Homebase and Argos. Both are struggling. Releasing its Q2 figures last month, HRG said Argos had posted its worst quarterly sales for nearly a decade, and it would write down the value of Homebase by 'several hundreds of million' pounds. The group's share price fell by 13.7p to 228p on the news. HRG values Homebase at pounds 1bn, but pessimistic analysts are putting it as low as pounds 100m. Half-year group profits were down by pounds 25m to pounds 150m.

THE SPIN

Said HRG's chief exec Terry Duddy: 'The performance of Argos and Homebase in the last quarter was reflective of a difficult consumer environment. The biggest factor is underlying demand.' He was adamant that HRG was performing 'comparatively well' and was on course to hit profit forecasts.

THE STRAIGHT TALK

Duddy admitted that October and November will be difficult for trading, and that much hope rests with a pre-Christmas shopping bonanza to lift figures and spirits. Homebase was bought six years ago from PE group Permira for pounds 900m, when HRG was part of GUS. Maybe it's not looking like such a great investment now. It's true that the credit crunch is biting into high street sales, but this won't excuse all the group's failings. …

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