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Research Tree provides access to ongoing research coverage, media content and regulatory news on HOME RETAIL GROUP. We currently have 4 research reports from 1 professional analysts.
|02Sep16 17:16||RNS||Holding(s) in Company|
|02Sep16 16:15||RNS||Completion of Acquisition|
|02Sep16 15:59||RNS||Form 8.3 - J Sainsbury Plc|
|02Sep16 15:20||RNS||Form 8.3 - Home Retail Group PLC|
|02Sep16 12:25||RNS||Directorate Change|
|02Sep16 11:45||RNS||Form 8.3 - Home Retail Group Plc|
|02Sep16 11:20||RNS||Director/PDMR Shareholding|
Frequency of research reports
Research reports on
HOME RETAIL GROUP
HOME RETAIL GROUP
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.
N+1 Singer - Morning Song 21-03-2017
21 Mar 17
accesso Technology (ACSO LN) Full year results in line, but key trading months still ahead | Augean (AUG LN) Double digit growth in ’16, good start to ‘17 | Earthport (EPO LN) Interims show continued top line strength | Goals Soccer Centres (GOAL LN) Good momentum under new team. It’s now all about delivery | IQE (IQE LN) FY’16 results prompt further upgrades | Microsaic Systems (MSYS LN) Challenges in 2016, strategy remains in place | mporium Group (MPM LN) Funds raised to help execute strategy | RhythmOne (RTHM LN) Dawn of the independents | ScS Group (SCS LN) Strong progress on key growth initiatives albeit comps now toughen | Sinclair Pharma (SPH LN) FY results: EBITDA ahead, Instalift™ gaining pace | Vectura Group (VEC LN) FY (9-month) results
N+1 Singer - ScS Group - Strong progress on key growth initiatives albeit comps now toughen
21 Mar 17
Whilst interim results are complicated by timing differences around order deliveries (flattery of c£1.9m) and rephasing of marketing (drag of c£1.9m), adjusted EBITDA improved by c£1.7m on an underlying basis – moving ScS into positive territory in its historically loss-making first half. Good progress was made on all 4 growth strategies and it maintained its 5-star score on Trustpilot. Whilst LFL order intake is down c5-6% in current trading, this reflects weak retail park footfall in Feb (not a conversion issue) and it has seen an improvement since the start of March. This means it is on track to meet FY expectations. Reassuring dynamics on margins & costs may add to investor relief, with the shares on <2x EV/EBITDA.
Strong set of full-year results, comforting guidance
23 Mar 17
GVC released a solid set of full-year results. Key highlights Pro forma Net Gaming Revenue (NGR) was up 12% at constant currency, or 9% on a reported basis at €895m, in line with the February trading update. Pro forma clean EBITDA was up 26%, at €205.7m, bang in line with AV’s €206m forecasts, translating a three percentage points increase in margin added to the growth in revenue. c.69% of NGR was derived from markets either regulated (including those in the process of regulating) and/or locally taxed (68% in 2015), while 95% of the revenues were derived from GVC’s proprietary platform. Net debt stood at €131.5m or 0.6x clean EBITDA. The board proposed a second special dividend of €0.15, giving a total dividend of €0.30 per share for the year, beating market expectations. Guidance The start of 2017 seems promising as management said that daily NGR had increased by 15% (+16% cc), translating into an 18% (+19% cc) growth in sports labels’ daily NGR and a 6% (+8% cc) increase in games labels’ daily NGR. The gross win margin reached 9.5% while it should move towards the 10% mark on the long term. Regarding dividends, the group confirmed a progressive distribution policy and expects to distribute at least 50% of the group’s free cash flow, starting from 2017. Debt refinancing In the first quarter of 2017, the group issued a €320m Senior Secured Term and Revolving Facility, composed of a €250m term loan (maturity 6 years) and a €70m revolving credit facility (maturity 5 years) used to pay down the Nomura Loan in full.
N+1 Singer - Goals Soccer Centres - Good momentum under new team. It’s now all about delivery
21 Mar 17
2016 finals have come in marginally below consensus PBT forecasts but this should not detract from positive operational and strategic momentum. There is still much work to do, but the tenor of the results is encouraging and management signals a good start to FY17. The main surprise is news of a third USA site opening. We tweak our FY17/18 PBT forecast up by 2% and stay at Buy on recovery grounds with a 140p 12m TP.