GUS: H2 trading statement

12:18 p.m. Sat 15 Apr 2006

Argos continues to growth through expansion with total sales up 9% despite flat like-for-like sales. It is a little disappointing that the continued roll-out of the much wider Argos Extra product range has done no more than maintain flat like-for-like sales.

Homebase did even worse with with like-for-like sales down 5% and total sales down 1%.

At least Argos, unlike Homebase, has maintained gross margin. Like GUS, we see no reason to expect a recovery in the DIY market so margins are likely to remain weak this year.

Experian continued to grow strong with revenue up 25% at CER. Organic growth was 9% - in line with last year and a little better than in the first half.

At 1012p GUS is trading on a prospective PE of 16× with a yield of just under 3%. This is not cheap against the retail sector. Given the weak performance at Homebase, the lack of like-for-like growth at Argos and the cyclical nature of Experian's revenues this is not attractive. However Experian is fast growing and Argos, despite its recent lack of growth, may well return to strong growth when consumer spending strengthens again (something there have been signs of).