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The mortgaged middle-classes are still buying garden furniture, but the working family man daren't splash out on a new television.
That's the conclusion from trading figures released today by Home Retail Group, the owner of Homebase and Argos.
Sales at the catalogue retailer Argos tumbled 6.5% in the six months to August, while revenues at Homebase were relatively stable, down just 0.8%.
Chief executive Terry Duddy says there is a “two-track market” in operation, with the reasonably well-to-do gaining in confidence and less comfortable folk nervous about the possibility of unemployment.
HRG says profit for the first half of the year will be down by 20%-25%. At the worst, that means profits will be £50 million lower than a year ago at £250 million.
The shares have been the worst performer in the FTSE this year, today dropping out of the index of the leading 100 companies.
The chief executive admits that the share price chart makes painful viewing. “It's waterslide,” he says. “But I can't just watch it on the upside.”
Duddy reckons that the issue is macro-economic rather than company specific.
The business is holding market share — at least — he says.
HRG is has been buying back stock to aid shareholder value and has so far been able to maintain a dividend.
The shares fell again today, off 7.3p at 214.1p.
