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Research Tree offers HOME RETAIL GROUP research coverage from 1 professional analysts, and we have 4 reports on our platform.
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|02/09/2016 17:16:14||London Stock Exchange||Holding(s) in Company|
|02/09/2016 16:15:01||London Stock Exchange||Completion of Acquisition|
|02/09/2016 12:25:01||London Stock Exchange||Directorate Change|
|02/09/2016 11:20:02||London Stock Exchange||Director/PDMR Shareholding|
|02/09/2016 11:20:02||London Stock Exchange||Director/PDMR Shareholding|
|01/09/2016 13:45:02||London Stock Exchange||Scheme has become effective|
|31/08/2016 17:17:12||London Stock Exchange||Dealings in Home Retail Group shares suspended|
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Research reports on HOME RETAIL GROUP
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Argos attempts a comeback
31 Mar 16
Home Retail Group (HRG) posted Q4 (8-week period ending 27 February 2016) and FY16 results slightly better than our estimates. In Q4, lfl revenue of Argos (core retail business) decreased by 1.1% and total revenue was up 1.9%, with a 3% contribution from new space. The non-electrical products (particularly furniture and general sports) and mobiles posted healthy growth, while jewellery and electrical products (gaming, tablets and white goods) witnessed a decline. Internet sales grew by 13% during the quarter and represented 51% of sales (vs. 46% in the same period last year). The gross margin at Argos was up 75bp (vs -225bp in Q3 and +100bp in H1) during the same period. For the full year, revenue at Argos declined 2.6% on a lfl basis (vs. our estimate of -3.1%) and the gross margin dipped 50bp yoy. However, reported sales growth was flat as the lfl decline was offset by new space (+2.6%), from the 94 digital concessions and collection points opened during the year. HRG generated better than expected cash flows during the year (excl. Homebase disposal proceeds) as net cash flow was close to zero (vs our estimate of £90m outflow and £110m outflow by consensus). The year-end underlying cash balance, excluding Homebase’s proceeds, stood at £310m (FY15: £309m). For FY16, the full-year benchmark PBT is expected to be c. £93m (vs. our estimate of £104m), in line with the guidance of the lower end of consensus expectations, i.e. £92m to £118m.
Late Christmas for Home Retail
09 Mar 16
UK-based retail group Home Retail Group (HRG) has become flavour of the season, getting multiple acquisition bids in recent months. On one hand, it has just sold its stake in the DIY business ‘Homebase’ to Australian retail group, Wesfarmers (owner of supermarket chain ‘Coles’) for £340m (17x FY14EBIT), and on the other, two retailers (Sainsbury’s and Steinhoff) have shown interest in acquiring the remaining business ‘Argos’. - Sainsbury’s: The UK-based food retailer had reached an agreement with HRG management on the cash-stock, under which HRG shareholders are to receive 55p in cash and 0.321 Sainsbury’s shares per Home Retail share. In addition, they will receive a dividend pay-out of 27.8p per share; 25p per share proceeds from the sale of Homebase and 2.8p per share in lieu of a final dividend. At yesterday’s closing price of 270.5p, the Sainsbury’s offer stands at 169.6p a share. - Steinhoff: The South African household goods retailer (also present in the UK and France) has lately made an all cash offer of 147.2p per share; including the Homebase disposal to Wesfarmers (at 27.8p a share), the total offer to Home Retail shareholders is 175p a share (c.£1.42bn). As per regulatory norms, both companies need to roll out a firm offer by 18 March 2016.
Q3 hamstrung by rickety Argos, while Homebase bids adieu
19 Jan 16
Home Retail posted Q3 FY15-16 results lagging market expectations as well as our estimates, pinned down once again by a bleeding Argos and the negative impact of Homebase store closures. Although Argos (c.72% of total revenue) clocked its highest-ever sales on Black Friday (+41% y-o-y), the subpar revenue growth in the rest of the quarter and depleted gross margins led the company to issue yet another profit warning (second in four months). As per the revised guidance, the benchmark PBT in FY15-16 is likely to be at the lower end of consensus range of £92m-£118m (vs. October 2015 profit warning of PBT below £115m) vs. our earlier estimate of £108m. Note that the third quarter results are always higher for Home Retail as the quarter typically has 18 weeks (30 August 2015 to 02 January 2016). - LFL sales at Argos declined by 2.2% during the quarter (vs. -3.4% in H1) on account of languishing sales of white goods, tablets and video games. The increase in online sales for Argos (53% vs 49% y-o-y, mobile commerce: 31% vs 28% y-o-y) during the quarter was offset by a 13% reduction in traditional store walk-in sales in December. New store openings (+3.1%, 95 digital concessions year to date) resulted in a net increase (though marginal) in total revenue to £1,837m (+0.9%). The gross margin at Argos was down 225bp (vs. +100bp in H1) due to the anticipated impact of adverse currency and shipping costs, higher marketing expenses and reversal of certain timing benefits realised in H1 FY15-16. - Homebase grew 5% on LFL basis (+5.6% in H1) boosted by performance of kitchen and bathroom products. Net sales, however, reduced by 4% to £434m on account of 9% reduction in store space during the period (6 stores shut in Q3 FY15-16, 31 closures ytd). Gross margin witnessed a decline of 50bp on the back of anticipated adverse currency and shipping costs, although a reduced level of stock clearance activity offered some respite. Despite dismal trading, the share price has rallied in the last few weeks on the back of news flow on M&A, first from Sainsbury and then from Wesfarmers: - Australia’s retail group, Wesfarmers has signed an agreement with Home Retail to acquire 100% of its DIY division, Homebase, for £340m (17x FY14 EBIT multiple). Homebase-owned brands Habitat, Schreiber, and Hygena would be excluded from the sale but licensed to Wesfarmers for one year. Out of the total proceeds, £200m would be returned to shareholders, while the rest would go towards restructuring and the pension scheme. Home Retail’s board has unanimously supported the deal which is expected to be completed in first quarter of calendar year 2016. - Sainsbury’s revealed on 05 January 2016 that its offer to buy Home Retail for c.£1bn was rejected by Home Retail. Sainsbury’s, which is buoyed by trialling Argos concessions in 10 of its stores, believes that the two firms offer complementary products. Sainsbury’s also released a presentation recently making a case for Argos which will enhance its online proposition (>50% online sales) and delivery capabilities. As per regulatory norms, Sainsbury’s needs to roll out the revised offer by 02 February 2016 or the acquisition bid will be cancelled.
PBT guidance lowered; gross margin erosion amidst weak markets
29 Oct 15
Subdued performance in Argos in H1 16 (ending August) and uncertainty on Argos's Christmas season performance in H2 16 led the company to issue a profit warning. As for the new guidance, FY16 PBT (pre-exceptionals) is likely to be below the consensus range of £115-140m as further slippage of 50bp in the gross margin is expected in both businesses (Argos: down 75bp to 30.3% and Homebase: down 100bp to 47.5%). Total sales in H1 declined 2% to £2,628.5m; Argos was down 1.5% to £1,743m and Homebase was down 2.2% to £816m. - Argos posted a lfl decline of 3.4% in H1 on the back of a decrease in the sales of electrical products, such as TVs, tablets and white goods, partially offset by a good performance in toys and mobiles; The gross margin was up 100bp and benefited from favourable FX movements and lower shipping in its sourcing costs with the build-up in inventory for the main season in H2 - Homebase’s lfl sales growth was 5.6% partially due to trade transfer and the stock clearance sales benefits (attributable to the store closure programme); however, total sales were down 2.2% on account of the impact of store closures (-7.8%). The online business (almost half of the Argos business) continues to grow and is supported by new digital store openings, now 148 out of the total 840 Argos stores. Argos's Transformation plan (Fast Track delivery, digital channel, etc.) as well as Homebase's Productivity plan (25 stores closed in H1) are on track.
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Panmure Morning Note 25-09-2016
25 Oct 16
Whitbread released interim results a little ahead of expectations with Revenues £1,556m (PGe £1,548m), giving underlying PBT £307.0 (PGe £301.3) and EPS of 133.9p (PGe 130.9p) with interim dividend of 29.9p (PGe 28.6p) however the outlook statement is fairly cautious and we do not expect to adjust our estimates ahead of the call. LFL sales of 2.0% was an improvement from 1.8% in Q1 but is increasingly being driven by room extensions rather than RevPAR or Costa LFL - hence is likely to be a drag on returns. UK room target is being scaled back 3,700 (from 4,000-4,500) and there is ££43.3m exceptional items relating to Premier Inn’s withdrawal from some international markets. No change to our view and we retain Hold recommendation.
Time to grab a late season holiday bargain?
22 Sep 16
Dart Group’s AGM update contained two good news messages. Trading in the first half of the current year has continued to be strong and is ahead of our forecasts. Also, in addition to the new base at Birmingham Airport announced in July, the company revealed that it was opening a base at London Stansted, which would also start operations in spring 2017. The considerable costs of setting up these two bases falls in the current financial year and the company therefore guided that reported profits are likely to be slightly behind market expectations. We think that the market has misconstrued the reasons for the forecast downgrade, leading to unwarranted share price weakness, which provides an excellent buying opportunity.
Construction delays have limited impact on value
14 Sep 16
PPHE’s 2016 interim results disappointed the market, as construction delays will affect 2016 profitability. The key point for long term investors is that, although the loss of profits and cash flow is disappointing, the business outlook for 2017 and on is unaffected, while property values are above expectations. Our forecasts for 2016 and 2017 are reduced for this and other reasons. The shares trade at a significant discount to book value as adjusted for the real value of the assets, and this value will be further boosted when the new hotels open, and we expect the discount to narrow.
29 Sep 16
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28 Sep 16
In H1 2016, the Group reported a like-for-like revenue decline of 3.9%, which was its worst performance for over a decade. Although the Concessions and Pub divisions delivered a ‘good’ performance, problems have arisen in the Leisure division, most notably with Frankie & Benny’s, but also with some of the other brands prompting management changes and a strategic review of the business.