Hi PP

We obviously disagree about HOME, which is fine of course as that is what makes a market. Just to pick up on a couple of your more strongly worded retorts, however....

Creditors, for example are covered by Stock, and remember that creditors include VAT whereas stock does not, therefore adjusting for that, they are roughly equal at about a billion quid apiece. Therefore my statement that net cash of an AVERAGE of £300m throughout the year (and not a year-end spike), plus the £500m debtor instalment book, are entirely surplus to what would normally be expected. So you've got that completely wrong.

I'm not really sure what your point is here. I was talking about the cash position, not the net current assets. You cannot pay creditors with stock and the VAT included in the trade creditor balance has to be paid to the supplier - though it is of course recoverable (and in most instances has probably already been recovered) against the output VAT on sales. Obviously in the normal run of business you convert the stock to cash (hopefully rather more cash than the book value of the stock!) and that is what enables you to service your trade creditors. The point that I was making is that an average of £300m cash on the balance sheet does not sound like surplus cash to me. IF my working assumption is correct that the trade creditors due within one year are largely due within 90 days, you have enough cash in hand to service the current month's payment runs, but not much more.

You write off the potential of HOME as a takeover, yet the Guardian article says it only has 7 loss-making stores out of over 700. That completely negates the need for a pre-pack Admin. Period.

My observation was that large-scale retail takeovers are currently out of vogue and I couldn't see who would be interested in HOME - and in particular I couldn't see why WalMart would be interested. If the Guardian article is correct, it suggests that HOME has a good store portfolio, but in practice (as I am sure that you know at least as well as me) retailers can play a lot of games with store profitability analysis. For instance, a store making a marginal contribution to head office and DC costs is not necessarily a store that you would choose to keep open because ultimately you need more than a marginal contribution across your estate.

Next, Argos is not trying to be an internet retailer, it IS an internet retailer & either the biggest or the 2nd biggest. About a third of their sales are internet, and for me, I love Argos - as I trust their brand. So instead of saving £5 on a TV from an unknown brand that might take my money & sit on it for 2 months, I will buy from Argos and get my good the SAME DAY - huge factor - by going to a convenient store nearby. Also, yes they pay more rent than an out of town shed, but they get all the additional business from people walking in. Town centres do great business in busy towns - Brighton is booming. OK, small towns are struggling. For me, I love buying at Argos online & then collect it 1 hour later, nobody else online can match that - i.e. Argos is the BEST online retailer- something you glossed over completely! Competitors cannot come close to what Argos already do - i.e. cheapest product, and instant collection.

You are clearly an Argos fan, I am clearly not so not much middle ground here. But just to pick up on the objective points in your analysis.

1 I don't believe HOME's claim that Argos is the second biggest internet retailer (in the UK presumably). Not that it really matters.
2 Plenty of people can match Argos on order online and collect within one hour. To take one practical, personal and current example I bought a new plasma TV yesterday (I know I am out of date and non-eco-friendly, but I just prefer plasma!). My first choice option for large ticket electricals is always John Lewis, but unfortunately in this instance they have just delisted the model that I am looking at. The JL price before it was delisted was £349 (including their no quibble five year warranty). Both Comet and Currys have the same model in stock available for in-store pick-up within 30 minutes - or with free home delivery within 24 hours and seven days respectively - also at £349, but without the five year warranty. I hadn't looked at Argos until reading your post because in my experience they are generally more expensive either than JL or the out-of-town sheds, but I have just checked now and the Argos price is £459 (no five year warranty) - and it happens to be out of stock currently. I am not claiming that this is necessarily a representative sample, but in my experience the Argos offer is far from unique.

HOME is capitalised at £600m, half of which is AVERAGE cash balance throughout the year, and another £500m is a debtor book, owned outright. Look at the Bal Sheet! You are blind to the value, because you haven't looked at the figures properly, have you?

I haven't looked at the figures as closely as you, I am sure, because I have grave doubts about the long term profitability of the HOME business, but I have looked at them and whilst the balance sheet is strong I don't find it a compelling reason to invest on its own. I don't think that I am blind to value - but perhaps I am. Again that is what makes a market.

It amazes me how gloomy people are, you have to look beyond the current cycle

I am gloomy, I confess! I think the current cycle has a long way still to run in UK retail and I am not currently invested in UK retailers, though it is a sector I have worked in and know a little about. But when I try to look through the clouds of despondency in my crystal ball, I don't see Argos as being amongst the winners in five years time.

If you are invested/investing in HOME, good luck. It certainly wouldn't be the first time that I have been wrong!

Timpernel