Home Retail sees 19 percent profit fall
Home Retail Group cut the book value of its Homebase DIY chain by 542 million pounds due to the declining retail market as it reported a 19 percent fall in first-half profit.
First Great Western to invest £29 mln in service improvementsNews of the write down and a warning on the full-year outlook sent shares in the group down as much as 11 percent on Wednesday to a new low.
The group said the carrying value of the 347-store Homebase business in its books would be 350 million pounds, down from the 900 million pounds it paid for it in 2002.
Homebase is the UK's second-largest home improvement retailer in the UK after Kingfisher's B&Q.
For the six months to August 30 the group, which also owns the 720-store catalogue-based retailer Argos, made an underlying pretax profit of 121 million pounds, bang in line with analysts' average forecast but down from 149.8 million a year ago.
The group blamed the fall on the difficult consumer environment. Total sales were flat at 2.74 billion pounds.
Home Retail said trading since the half-year end had been "tough and volatile," with like-for-like sales at both Argos and Homebase down in percentage terms by "high single digits."
"The challenging conditions look set to remain for some time, and indeed have worsened in the turbulent recent weeks," said Chief Executive Terry Duddy.
He said if these conditions continue through the peak trading months of November and December, the profit outcome for the year would likely be around the bottom of current market expectations.
Home Retail said the current range of analysts' expectations for the year to end-February 2009 was 327 million pounds to 370 million pounds, with a consensus of around 350 million pounds. Last year the group made 433 million pounds.
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