Friday 28th Oct 2016 - Logistics Manager

Shipping costs hit margins for Argos and Homebase

Home Retail Group said rising shipping rates and adverse currency effects hit margins at its two main operating businesses, Argos and Homebase, in the second quarter.

The group’s second quarter trading statement revealed a 100 basis point decline in gross margin at Argos. HRG said that on top of the shipping and currency effects there had also been an increased level of stock clearance activity during the quarter. However, these factors were offset in part by a continued benefit from the sales mix.

At Homebase, a flat gross margin performance “was driven principally by the anticipated net impact of adverse currency and shipping rates offset by a sales mix impact”.

Group chief executive Terry Duddy said: “Overall the performance in the quarter was in line with our expectations. Argos’ sales continued to be impacted by the decline in the consumer electronics market, while at Homebase, after a good first quarter which saw strong seasonal sales, the second quarter was more challenging.

“While continuing to plan cautiously, we are in good operational shape as we approach the Christmas trading period. We continue to develop and invest in our customer proposition across the businesses.”