THE owner of catalogue retailer Argos says it has pulled the plug on its shareholder dividend as it revealed a 60% plunge in annual profits.
Home Retail Group’s decision to cut the payout – described as “pretty brutal” by one City analyst – triggered a further 12% slump in shares of the beleaguered retail chain, which also owns Homebase.
The board said trading conditions, which caused a 20% decline in the market for consumer electronics in the year, contributed to the removal of the full-year dividend as it looks to focus resources on its turnaround.
Profits for the group were £90.2m in the year to February 25, which compares with £426m in the 2008 financial year. Argos has dropped to £94.2m from £376.2m over the same period. The results have fuelled speculation over whether Home Retail plans to cull any of its estate of 748 Argos shops and 341 Homebase outlets.
The chain has brought in consultants OC&C to help new managing director John Walden assess the Argos business but insisted that widespread store closures were not planned, given there were just seven loss-making Argos stores.
Philip Dorgan, an analyst at Panmure Gordon, said Home Retail needed to be “much more radical if it is to survive in an online world” and Argos would need a “significant store closure programme”.