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Argos 'on track' with digital transformation plan despite slowing sales

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Home Retail Group chief executive John Walden today said Argos was on track with its digital-first transformation plan despite weakening sales growth.

The company said in a trading statement that Argos sales of £4.1bn in the year to February 28 were up by 1.1% in total sales, but by a weaker 0.6% on a like-for-like basis, which strips out the effect of store openings and closures. In the second half of the year alone, sales of £2.3bn were 1.1% down, like-for-like, while £505m in sales in the eight weeks to February 28 were 5% down, like-for-like, on the same period last year. Over the full year, internet sales represented 46% of Argos sales, with mobile commerce accounting for 25% of total Argos sales after growing by 38% during the year.

The company said the eight-week period should be taken in comparison with a strong like-for-like growth at the same time last year. But it warned that sales may be lower for the next half year. "In the period we began to prioritise improved customer experiences following the rapid introduction of extensive new capabilities in prior periods. Taken together, these factors may continue to impact sales momentum in the next couple of quarters."

But, said Walden, pre-tax profits would be at the top end of market expectations of between £120m and £132m. He said: "Argos continues to make good progress with its transformation plan. Over the plan's first two years we have delivered a significant amount of change and many new capabilities. However, it is important that we achieve an appropriate balance between the implementation of these new capabilities and ensuring good customer experiences. We are on track to deliver both the Argos transformation plan and the Homebase productivity plan over the next three years."

At Homebase , full-year sales of £1.5bn were down by 0.7% in total terms, compared to the same time last year, but 2.3% ahead on a like-for-like basis. Half-year sales of £644m were 0.1% down, like-for-like, while in the final eight weeks of the period, sales of £193m were 0.9% down, like-for-like.
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