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Argos took action to prevent the Black Friday discount effect hitting Christmas profits

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Argos today showed the extent of the Black Friday effect, with sales for the day up by 45% as customers looked for bargains.

Black Friday week was the busiest ahead of Christmas, and parent company the Home Retail Group, today reporting figures for the 18 weeks to January 3, said it adapted its trading during the week to protect its margins and cost base. It said: “The highly promotional and high volume nature of this event threatened profit in this key period.”

Chief executive John Walden said: “I am pleased with our overall performance during our important peak trading period, having managed through a volatile trading environment with good control of both gross margin and costs. This year’s adoption of Black Friday promotional events generally by the UK market significantly impacted the shape of Argos’ sales over its peak trading period. For example, on the day alone, sales at Argos were up by 45%, while at the same time, it received over 13.5 million visitors to its digital channels, three times last year’s visitors, with mobile channels representing 71% of visits and 61% of digital sales. The draw of discounts affected trade both before and after that busy weekend as consumers satisfied their Christmas shopping lists with bargains.

“In anticipation of volatility in trading patterns and the profit pressure caused by aggressive promotions, Argos pursued a more cautious trading stance over the period. This resulted in broadly flat like-for-like sales, but achieved both improved gross margins and good cost management. Argos also made good progress during the period on its Transformation Plan to reinvent itself as a digital retail leader, as sales through digital channels increased to represent half of Argos’ total sales.”

Argos reported sales of £1.8bn, in the 18 weeks to January 3, with like-for-like sales up by 0.1%, and total sales up by 0.8%. In the 44 weeks to January 3, sales hit £3.6bn, 1.5% ahead on a like-for-like basis, and 1.9% ahead in total sales.

Internet sales represented 49% of total Argos sales during the 18-week period, up from 46% at the same time last year. Mobile sales rose by 40% to represent 28% of total Argos sales, up from 20% last time, while Check & Reserve sales represented 80% of internet sales.

Homebase , by contrast, reported sales of £451m in the 18 weeks, a like-for-like sales gain of 0.6%, but a fall in total sales of 2.7%, as 12 store closures reduced selling space. By the end of the period it had 304 stores and it expects to close a further six stores by year end. In the 44 weeks, its sales of £1.3bn were 2.9% ahead, like-for-like, but total sales were flat.

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