GUS reports a mixed bag

By THIS IS MONEY
Updated:

 

Homebase and Argos owner GUS today reported a mixed set of results as it prepares for the demerger of its retail and credit checking businesses.

A rush to snap up flat screen TVs and set top boxes before the World Cup helped boost like-for-like sales at Argos by 5% in the five months to August 31.

The company described the performance as 'outstanding' and said it had also noticed strong growth in sales of child safety products and video game consoles.

However, the picture wasn't so rosy at its Homebase chain as like-for-like sales for the six months to August 31 suffered a 3% slump.

The firm said it was caused by weakness in the decorating and core DIY markets, although it received a shot in the arm from the warm weather with air conditioning and gardens doing well.

The trading update came as GUS released more details about its plans to split the home retail arm from the Experian credit-checking business, including shareholders' entitlements. Experian's sales lifted 18% in the five months to August 31 with organic growth of 7% thanks to strong growth in email marketing and research services.

Nottingham-based Experian is best known for its credit checking service, but also provides software and systems to run all aspects of card and loan processing for a large number of providers in the UK.

Much of Experian's business is generated in the United States, but following the demerger its shares will be listed on the London Stock Exchange.

Experian hopes to raise £800m through the new share issue, which will see the Argos Retail Group arm of GUS - which takes in Homebase and Argos - renamed Home Retail Group.

Shareholders will receive one share in each of the new businesses - Home Retail and Experian - and GUS will no longer exist.

Both Argos and Homebase will continue to trade under their own names and the last day of trading for GUS shares will be on October 6.

The price range for the Experian shares will be 475p to 610p with the final price announced on October 6. The demerger will be effective from October 10.

Christian Koefoed-Nielson, an analyst from Panmure Gordon stockbrokers, said there was a clear indication that things were tough in UK retail.

He said: 'Nevertheless the performance is significantly better than UK retail generally and we believe the Argos-Homebase combination continues to face attractive growth opportunities.'

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