Argos’ parent company was this week in upbeat mood on its plan to reinvent Argos as a leader in digital retailing.
Home Retail Group, in an end-of-year trading update, said the company expected to turn in a benchmark pre-tax profit of around £90m after “a challenging year”.
Terry Duddy, chief executive of Home Retail Group, said: “Against a backdrop of subdued consumer spending for the new financial year, we will continue to invest and are focused on delivery of the transformation plan to reinvent Argos as a digital retail leader and the Homebase proposition.”
In the year to March 2, Argos turned in total sales up by 1.5% at £3.9bn, while like-for-like sales were up by 2.1%.
In the eight weeks to the same date, total sales were 4.3% up at £501m, while like-for-likes were 5.2% ahead. The growth was put down improved sales in consumer electronics, notably tablets.
Total internet sales grew ahead of the overall sales growth: some 43% of Argos’ total sales involved the internet, up from 40% a year ago. Mobile commerce sales were up by 117% on last year.
Meanwhile, Argos also continues to adjust its store portfolio in the light of the online effect. It has closed 11 stores over the full-year, taking its total estate to 737.
But while Argos’ sales were up, Homebase reported a decline. The DIY-to-home-and-garden-equipment retailer saw full-year total sales fall by 5.2% to £1.4bn, while like-for-likes were down by 4.9%.
In the eight weeks to March 2, total sales fell by 2.8% to £191m, and like-for-likes were down by 1.5%.
Peter Saville, partner at advisory and restructuring firm Zolfo Cooper said Argos was forging a path to multichannel success.
“Whilst the business is clearly doing well in transforming itself from a catalogue merchant to a strong online player, a click-and-collect model probably doesn’t require such a large store portfolio,” he said. “Key to Argos’ medium-term success will be ensuring that its cost base and infrastructure is shaped appropriately to meet the changing demands of the consumer.”
