Homestyle profits drop 19% but Reid acquisition boosts turnover

Pre-tax profits at the group, owned by South African home giant Steinhoff, dropped to £26.7m in the year, from £32.9m the year before.

In documents filed at Companies House, the retailer blamed adverse weather conditions in its peak period in January 2010, the VAT increase to 17.5% and higher freight costs. It also highlighted “volatile currency and uncertainty surrounding the election”.

Gross profit margin declined from 54.6% to 50.5%.

However, the group, which also operates Reid Furniture, Sleepmasters and Bed Shed, said revenue “remained strong”, growing 14% to £468m, up from £411m the year before. Homestyle said the growth partly came from the acquisition of Reid Furniture in 2009, which contributed 12 months of sales in the year compared with three months in the prior year.

Homestyle realigned its portfolio in the year, rebranding some stores and closing underperforming shops, particularly those of Reid Furniture.

It would not give any indication of current trading or a breakdown of how the retailers performed individually, saying it does not comment on trading at a country level.

In Steinhoff’s annual report in September chief executive Markus Jooste said the UK market showed “signs of stabilisation following a period of great uncertainty”.

He added: “Our retail operations reported encouraging growth and continue to reap benefits from the industry rationalisation during the downturn. However, we anticipate continued pressure on trading conditions and the general economy will dampen the rate of consumer confidence recovery.”

Earlier this month Retail Week revealed Harveys had hired former Dixons director Stephen Campbell as its new managing director, replacing Ian Topping, who had been overseeing Harveys. Topping is now focusing on his permanent position as chief executive of Steinhoff UK.

Understand Homestyle and its constituent parts with Retail Week Knowledge Bank’s profile: retail-week.com/homestyle