Gusbourne Regulatory News (GUS)

12 Jan 2006 07:01

GUS PLC12 January 2006 12 January 2006 GUS plc Third Quarter Trading Update GUS plc, the retail and business services group, today issues its regular updateon trading. John Peace, Group Chief Executive of GUS, said: "The performance of both ARG and Experian in the third quarter reflects thebenefits of our continued investment in initiatives to drive sustainable growth.Both Argos and Homebase outperformed their markets in the period, whileExperian's broad range of products and services in many countries around theworld continued to underpin its strong performance." Argos Retail Group (ARG) % change in sales year-on-year for 14 weeks to 7 January 2006 %Argos - total 9 - like-for-like 0 Homebase - total 1- like-for-like (3) The non-food, non-clothing market remained weak during the period, althoughthere was a boost to spending in the run-up to Christmas. Against thisbackground, initiatives at Argos, including Argos Extra, and at Homebase,including mezzanines and Furniture Extra, have enabled both businesses again tooutperform their markets. Looking forward, ARG continues to plan on the assumption that like-for-likesales will remain in decline for the non-food, non-clothing market as a wholefor much of 2006, with increased promotional activity continuing in the DIYmarket in particular. UK retailers are also facing inflationary pressures oncosts, as previously outlined. Argos In the 14 weeks to 7 January 2006, total sales at Argos increased by 9%. Newstores contributed all of this growth, aided by the 33 acquired Index stores.Argos had 650 stores at the period end, up from 583 a year ago. Like-for-like sales at Argos were in line with last year, supported by thenational roll-out of Argos Extra. The contribution to sales of toys andjewellery in the third quarter is about double that in the rest of the year;jewellery remained a difficult market. There was, however, a good performancefrom consumer electronics, with strong market demand in gift areas such as MP3players and video games systems, as well as flat screen TVs and satellitenavigation. Furniture and white goods also achieved good growth. Gross marginwas in line with last year as supply chain gains countered an adverse productmix. Customers continued to increase their use of Argos' multi-channel capabilities.Argos Direct, the delivery to home operation, grew sales by 14% in the period,representing 19% of sales. Within this, sales ordered on the Internet increasedby 37% in the period, contributing 6% of sales. A further 13% of sales werereserved by phone or Internet for later collection in store (Check and Reserve),up 38% year-on-year. The Spring/Summer 2006 catalogue, which will be launched on 21 January,continues to give customers better value and increased range. It will be thefirst Spring/Summer catalogue to offer customers in all stores the entire Extrarange of 17,200 lines (up from 13,300 in the main catalogue a year ago). Homebase Sales at Homebase grew by 1% in the 14 weeks to 7 January 2006. New storescontributed 4% to sales growth. Homebase traded from 297 stores at the periodend (of which 141 had mezzanines) compared to 287 a year ago (104 withmezzanines). Despite an increase in promotional activity compared to last year,like-for-like sales declined by 3% in the period. Gross margin was slightly downyear-on-year. In what remained a very difficult DIY market, total sales of core DIY anddecorating products were lower than last year. Homebase's performance in thequarter was, however, helped by good growth in big ticket items driven byinitiatives such as new mezzanines and the national roll-out of the FurnitureExtra catalogue in Autumn 2005. Experian % change in sales year-on-year for the three months to 31 December 2005Continuing At actual exchange At constant activities only rates % exchange rates % Experian North America 40 31Experian International 8 8Global Experian 25 20 Experian again performed strongly, with a 20% increase in sales in the thirdquarter (7% organic; 13% from acquisitions). Experian continues to win businessin many countries, driven by the strength of its product range, its business mixand broad global reach. As expected, growth at Experian North America slowedfrom the exceptional levels achieved in the last twelve months. Experian North America In dollars, sales at Experian North America increased by 31% in total, of which23% came from corporate acquisitions. Although the business traded against muchstronger comparatives, organic growth in the quarter was 8%, supported bycontract wins in many areas. In dollars, Credit Information and Solutions together delivered double-digitgrowth excluding acquisitions. This was driven by continued strength inprescreen, scoring and analytics. The FACT Act cost recovery charge contributed3% of the growth in Credit and has fully annualised from 1 January 2006.Marketing Information and Solutions together showed solid growth, with e-mailmarketing and syndicated market research performing particularly well. Experian Interactive accounted for 35% of North America sales in the thirdquarter. This reflected a first time contribution from acquisitions(LowerMyBills.com, ClassesUSA and PriceGrabber.com), which are trading ahead ofplan, and a continued strong performance from Consumer Direct. MetaReward wasdown year-on-year as expected as it anniversaried some large, one-off campaignslast year. Experian InternationalAt constant exchange rates, sales at Experian International increased by 8% inthe third quarter. Organic growth was 6% and acquisitions contributed 2% (as QAShas now been part of Experian for more than a year). Experian International showed solid growth in Credit, Marketing and Outsourcing.There was good growth at Experian UK despite subdued consumer lending. Thisreflected strength in both credit and marketing solutions, continued newcontract wins in the telecoms and public sectors and direct-to-consumer.Experian-Scorex delivered double-digit growth with strong performances inEastern Europe and Asia Pacific. The French Outsourcing business has recentlywon major contracts in cheque processing and the government sector. Experian International continues to make complementary acquisitions, includingFootFall, the market leader in measuring pedestrian shopper flows. Thistransaction reinforces Experian's position as a leading provider of data,analytics and consultancy services for retailers and property owners. Disposals The demerger of GUS' remaining stake in Burberry to its shareholders wascompleted on 13 December 2005. Benchmark profit before tax1 for GUS for the yearto 31 March 2006 will include a contribution from Burberry up to the date ofdisposal. On 28 October 2005, GUS announced an agreement to dispose of Wehkamp for about€390m to Industri Kapital, a private equity firm. Subsequently, the Dutchgovernment announced a reduction in the maximum interest rate chargeable bycommercial lenders to consumers from 21% to 16%. As this reduction will have asubstantial effect on the future profitability of Wehkamp, the external fundingmade available to the purchaser was cut. In the circumstances, GUS has agreed toa reduction in consideration to approximately €320m to reflect lower expectedearnings. Completion of the transaction is expected later this month. The netbook value of assets at the date of completion is expected to be approximately€335m. GUS now expects to realise a loss, after costs, of about €25m on thetransaction which will be booked in the second half of the current financialyear. Future announcementsGUS will announce its Preliminary Results for the 12 months to 31 March 2006 on24 May 2006. The Second Half Trading Update will be on 12 April 2006. Enquiries GUSDavid Tyler Group Finance Director 020 7495 0070Fay Dodds Director of Investor Relations FinsburyRupert Younger 020 7251 3801Rollo Head GUS announcements are available on its website, www.gusplc.com. There will be aconference call to discuss this update at 3pm today, with a recording availablelater on the GUS website. Certain statements made in this Trading Update are forward-looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual events or results to differmaterially from any expected future events or results referred to in theseforward-looking statements. 1 Benchmark PBT is defined as profit before amortisation of acquisitionintangibles, exceptional items (i.e. gains or losses on disposal or closure ofbusinesses and goodwill impairment charges), financing fair value remeasurementsand taxation. It includes the Group's share of associates' pre-tax profit andthe profits or losses of discontinued operations up to the date of disposal orclosure. This information is provided by RNS The company news service from the London Stock Exchange