Argos owner hails technology boost

ArgosCatalogue chain Argos reported a return to sales growth as demand for iPads and Kindles offset declining interest in video games and MP3 players.

Argos parent Home Retail Group said the continued improvement in consumer electronics resulted in like-for-like sales growth of 1.4% in the 13 weeks to September 1, following a 0.2% drop in the first quarter.
However, same-store sales at Home Retail's Homebase chain continued to fall in the second quarter, by 3.7%, as weather dampened demand for seasonal products, although the figure was better than the 8.3% decline in the previous three-month period.

Home Retail chief executive Terry Duddy said: "At this stage, we expect to deliver full year group benchmark profit in line with current market expectations but, as always, the outcome will depend upon trading at Argos in its peak Christmas period."

Shares fell 3% as analysts continued to question the group's strategy.

Freddie George, Seymour Pierce retail analyst, said: "There appears to be little loyalty from customers with the company's core categories and there is growing competition from the specialists and food retail multiples. At present, there is also little in the current strategy that in our view will arrest the current decline in Argos' profits."

Argos launched its autumn/winter range on July 21, with more than 43,000 products online and 9,000 new products in its 78th catalogue. The range features gym gear endorsed by gold-medal winning GB athlete Jessica Ennis.

Total sales at Argos grew by 1% to £867 million in the second quarter. Closed space at the chain reduced sales by 0.4%, with seven stores closing in the quarter, reducing the store portfolio to 739.

Sales via the online Check & Reserve service grew 24% and represented 30% of total Argos sales, Home Retail said, while total internet sales grew 16% and represented 42% of total Argos sales. A decline in its gross margin in the second quarter was driven by price cuts in the period, although a reduced level of stock clearance activity offset some of this effect.

Meanwhile, at Homebase total sales declined by 3.9% to £366 million. Homebase saw a gross margin improvement of 0.75%, driven by reduced shipping costs and strong sales mix.
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