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Argos internet sales pass £1bn

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Home Retail Group, owner of Argos and Homebase, has reported its annual results for the year to end February 2009.

Key highlights from the results include:

  • The internet now generates more than a quarter of Argos’ sales, with continued transfer of skills to support the rapidly growing Homebase online offer

  • Total sales were down 1% to £5,897m, with like-for-like sales down 4.8% at Argos and down 10.2% at Homebase.

  • Group gross margin was down 81 basis points, with an approximate 100 basis point reduction at Argos and an approximate 25 basis point increase at Homebase

  • Total operating costs and distribution costs increased 1%, with underlying inflation of approximately 3% being largely offset by cost reduction actions.

  • Benchmark operating profit was down 25% to £300m, with a decline of £73m or 19% at Argos and a decline of £30m or 67% at Homebase

Given the group’s strong presence online, details of the company’s internet operations were given prominence in the report. At Argos:

  • The internet accounted for £1.1 billion of Argos sales, up 22% from £900m a year ago.

  • The internet is now responsible for 26% of Argos sales, up from 21% in 2008.

  • Of this, £700m (17%) of Argos sales were Check & Reserve, up from £500m last year.

  • Multi-channel sales — internet or phone orders, or store orders for home delivery — totalled £1.7 billion or 40% of all of Argos sales.

  • A series of improvements have been made to Argos’ Check & Reserve service. Customers can now see real-time stock availability of any product in their two nearest stores and can check availability in a further eight alternative stores; a text message is sent to confirm the reservation number when an online reservation is made and a reminder text is sent at midday on the day the reservation expires.

Homebase’s online offer is less developed than that of Argos but work is on-going to make improvements:

  • 5,000 Homebase products can now be bought online.

  • Another 11,000 Homebase lines can be viewed online, with the aim of all products ultimately being either viewable or buyable.

  • A Stock Check service for browseable lines has been rolled out to all UK stores. Check & Reserve is on trial in 25 stores.

  • A further 9,000 Argos products are also now available for home delivery via the Homebase website and there is a “continued transfer of skills” between Argos and Homebase.

“Argos and Homebase will continue to develop their internet offerings as a further important growth opportunity…,” the annual report reveals. The internet “is also supported by the scale efficiencies of the shared home delivery infrastructure that delivered 12 million items in the year. The shared Financial Services platform, which provides promotional credit offers across all customer channels, adds further competitive advantage.”

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