Argos sales strength boosts group
SOARING profits at retailer Argos helped parent Home Retail Group to deliver better than expected results today.
Strong sales of flat panel TVs, games consoles and mobile phones saw Argos lift operating profits by 50% to £99.5m in the half-year to September 1, with like-for-like sales ahead 1.4%.
The performance boosted Home Retail Group’s pro-forma pre-tax profits by 40% to £149.8m, beating analysts’ consensus forecasts.
Chief executive Terry Duddy described the Argos performance as a “particularly good result”, but said the group remained cautious over the consumer outlook following recent interest rate hikes.
The wet summer weather meanwhile dampened profits at its DIY chain Homebase, where like-for-like sales slipped 2.5%.
The strong performance from Argos offset fears over competition from internet shopping and Tesco Direct, the supermarket giant’s new catalogue offering.
Homebase also faces a challenge from the likes of rival B&Q.
Argos launched its biggest-ever catalogue in July - including more than 18,000 lines - and branched out into new areas including pet-care and eco-friendly goods.
The retailer has also grown its store portfolio to 685 stores and increased the number of its “Extra” stores - offering more items for immediate pick-up - to 252. Meanwhile, online shoppers now account for 18% of all orders after 28% growth over last year.
Home Retail Group has also pushed on with expansion plans for its Homebase chain after buying 27 stores from DIY retailer Focus two weeks ago.
Homebase currently has 311 stores but the group believes there is scope for 450 sites.
