11 June 2009

A spring in profit is in the air

The Home Retail Group is the latest retailer to reap the benefits of buoyant weather this spring as it declares better than expected first quarter results, reports the Financial Times.

Home products chain Homebase, expected to report declining sales, but emerged with sales growth of 5.8 per cent to £465m and 3.8 per cent on a like-for-like basis.

According to group executives, spring played a major part in the bounceback. Season-driven items, such as garden and barbecue equipment, accounted for 40 per cent of sales between March and May.

Kitchen sales also experienced good growth, the group said. However, Homebase’s gross margin declined for a 250 basis points due to increased promotions and a lower than average margin on these items.

While this marketing activity may enable Homebase to give B&Q a run for its money, it should also warn the independent sector to stay away from entry-level kitchens.

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