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Prime Markets in the Press - Home Retail (HOME)

20/10/2010

Shares in Home Retail Group (HOME.L) shed 3 percent after Britain's No.1 household goods retailer posts an as-expected 23 percent fall in first-half profit as cash-strapped low-income shoppers trim their spending.

The firm, which owns Argos and DIY business Homebase, made an underlying pretax profit of 95 million pounds in the six months to Aug. 28.

"At the Q2 pre-close on Sept 9th, Home forecast a 25 percent fall in H1 PBT, so the figures today come as no surprise," Arden Partners analyst Nick Bubb says.

"The statement is defiant, focusing on the group's operational strength in Online and multi-channel retailing, as well as its ability to keep cutting costs, but there is no comment on current trading (other than to say they are "planning cautiously") or any apparent change to full-year guidance," Bubb adds, saying he would look for reasons to take profits in Home Retail stock.

And Richard Curr, head of dealing at Prime Markets, says at current levels, Homebase shares are "a sell into strength, but we expect a retest of lower resistance at 200p and below in the coming days and weeks."

"The group are in a sound financial position, as demonstrated by the maintained dividend, but this cannot detract from bearish fundamentals such as declining markets and the spectre of Government austerity measures impacting further on consumer spending," Curr adds.

Reuters

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