20 October 2010 – interim results

The group’s half yearly results, covering the 26 weeks to 28 August, have revealed a 3% drop in sales to £2.72bn, whilst benchmark pre-tax profits fell by 23% to £95m for earnings per share on the same basis of 7.7p, a 21% decline on last time.  The interim dividend was maintained at 4.7p as expected.  Homebase enjoyed another good performance in its peak trading period, with sales only falling marginally as it picked up market share in a declining market, although Argos found trading more difficult.  Pressure on operating margins led to profits falling by more than sales, although the run up to Christmas is clearly key to the group’s full year results.  At the end of the period the group had net cash of £327m and we continue to rate the shares a BUY.