More on GUS
GUS: Q3 trading update
Argos did better than in the first half with like-for-like sales stable year on year. Given that Christmas does not appear to have been as bad for retailers as many feared, it is disappointing that the continued roll-out of the expanded (”Argos Extra”) product range is only adding enough to halt the decline rather than driving growth.
However, the end to the like-for-like decline does mean that growth now at least matches expansion and Argos’s total sales were up 9%.
Homebase saw like-for-like sales decline a further 3% and total sales rise just 1%.
Organic growth at Experian remains strong at 7% (a little weaker than last year’s 9%) with acquisitions adding another 13%.
With the demerger of Burberry now complete GUS is a reasonably straightforward business. There is likely to be a further demerger to separate the retail businesses from Experian which would create two very focused successor businesses.
At 980p Argos is trading on a prospective PE of 15× with a 3.3% yield. This is within the sector range. Argos and Homebase have not been performing particularly well but neither has the sector. Although we continue to fear that Argos is approaching the limits of its growth the stabilization of like-for-like sales does provide some re-assurance and Experian should continue its strong growth.
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