Home Retail Group Plc’s (HOME) Homebase chain expects garden sales to pick up this year on the prospects of better summer weather and will keep offering promotions in a difficult market, Managing Director Paul Loft said.
“We would be budgeting for better weather,” Loft said in an interview at the Retail Week Conference in London today. “Last year was the worst summer since 1912, and anyone selling garden products will not have budgeted to replicate last year’s poor weather. There will be some small pickup in sales in garden because of that.”
Homebase, whose revenue dropped 0.9 percent to 1.54 billion pounds ($2.3 billion) last year, according to data compiled by Bloomberg, is struggling to turn around sales as Britons curb spending on home improvement. Gardening is about 20 percent of its revenues, Loft said. The executive expects housing transactions, which stimulate spending, “won’t pick up much” this year and sees “no change” next year as well.
Home Retail will report fourth-quarter same-store sales tomorrow. The median estimate for five analysts is for a decline of 3 percent at Homebase. Home Retail also owns the Argos catalog chain.
“Our view is while the market stays at it is, promotional activity will stay where it is,” Loft said. “We see the market as staying flat and difficult and promotions is a way of trading within that environment.”
The retailer is focusing on improving stores with space given over to “home enhancement,” like paints and tiles while as much as 30 percent less space is for do-it-yourself products, like repairs and maintenance. Loft is also spending six to eight times more than he ever has on Homebase’s multi-channel offer, for projects such as introducing Wifi in stores and adding information to its website, such as ideas and inspiration for new kitchens.
Home enhancement will grow faster than do-it-yourself sales as housing transactions slow, Loft said. Britons tend to buy a lot to get homes ready for sale and then spend two to five times their typical annual amount in the first year of owning a new home on kitchens and do-it-yourself, he said.
Homebase’s Habitat line, which is now available in 200 stores, has been “tremendously successful,” Loft said. The chain also sells the Schreiber brand of bedroom and kitchen furniture as well as Qualcast powertools and lawn mowers from Bosch and is interested in acquiring more such brands “that mean something to customers” as a starting point rather than inventing something “no one has ever heard of,” the executive said.
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