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Central Activities/New Development
Central Activities
| |
|
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| Pro forma 52 weeks to |
3 March
2007 |
4 March
2006 |
| Central Activities (£m) |
(24.0) |
(22.7) |
Central Activities represents the cost of central corporate functions
and, going forward, the investment costs of new development opportunities.
Cost growth in the year was slightly ahead of previous expectations
as a result of recording £1m loss on the disposal of Whiteaway
Laidlaw Bank.
Central Activities are expected to include an additional £5m
of costs in each of the next two years in relation to the investment
in new development opportunities.
New development opportunities
In February 2007, Home Retail Group signed heads of terms to develop
the Argos retail format in India through a franchise arrangement
with a joint venture company owned by leading Indian retailers Shopper’s
Stop Ltd and Hypercity Retail India Private Ltd. Under the terms
of the arrangement, Argos will be providing its brand, catalogue
and multi-channel expertise and IT support. The business will be
launched towards the end of the year under the ‘HyperCITY-Argos’
brand name, initially in the Mumbai region. At this stage, it is
envisaged that the proposition will be based largely on the existing
Argos multi-channel proposition.
On 25 April 2007, Home Retail Group completed the acquisition of
a 33% stake in ‘home store + more’, the Irish retailer.
‘home store + more’ is an out-of-town homewares format,
currently with two stores in the Dublin area. The investment of
around £7m (€10m) will be used to fund an agreed plan
to expand the out-of-town homewares chain in Ireland. It expects
to open approximately three stores a year over the next few years.
Separate from this investment, the management team of ‘home
store + more’ will also support Home Retail Group in its own
development of a homewares format in the UK. Home Retail Group expects
the initial pilot phase to include up to three UK stores in the
next 12 months.
Outlook
The Group has performed strongly for the financial year just completed.
However, we remain cautious on a retail environment that is still
expected to be challenging. In addition, comparatives for the retail
market as a whole, and particularly Argos, become tougher as we
start to face last year’s positive impacts of the World Cup
as well as certain other product categories that boosted the first
and particularly second financial quarters last year.
Home Retail Group continues to position its’ businesses accordingly,
and has entered the new financial year from a position of operational
strength.
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