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The company will reveal its full-year figures in April, and dealers are anticipating revenue of £5.77 billion and adjusted net income of £79.9 million. These estimates represent a 1% rise in revenue and a 12% drop in adjusted net income. The company reports its second-half results on the same date and traders are expecting revenue of £3.16 billion, which compares with the second-half revenue of £2.6 billion.
The profit warning from Home Retail Group in October left the company vulnerable for a takeover bid. Even though it knocked back Sainsbury’s bid, the supermarket has until 2 February to make a concrete offer or else walk away from the deal for at least six months.
Argos is still going through its transformation process, but the additional cost of the same-day delivery service tripped the company up. Falling sales of electronic products made matters worse for Argos, and the increasing popularity of Black Friday in the UK made the Christmas spending period harder to predict.
Homebase, Home Retail Group’s other business, is also undergoing restructuring as more store closures are on the horizon, and profit margins fell in the first-half.
Sainsbury’s sold the Homebase business to Home Retail Group in 2000, and it is believed it would sell it again if the takeover goes ahead, due to its interest in Argos. Mike Coupe of Sainsbury’s feels that closing more Argos stores and pushing the click and collect service would be beneficial to both, as Sainsbury’s supermarkets would also act as the collection point.
Equity analyst are bullish on Home Retail Group, and out of the 17 ratings, seven are buys, six are holds and four are sells. The average target price is 135p, which is 4.25% below the current price.