Argos shrugs off takeover 'distraction' to post sales rise

Retailer Argos notched up its best sales performance for two years as it shrugged off poor early spring weather and the "distraction" of its £1.4 billion takeover by Sainsbury's.

Owner Home Retail Group said like-for-like sales at Argos edged 0.1% higher in the 13 weeks to May 28, while total sales rose 2.6% to £868 million, thanks to a surge in online sales.

The group said its digital makeover was bearing fruit as internet sales rose 16% in the quarter - its strongest growth for more than three years - with online sales making up almost half of all revenues.

John Walden, chief executive of Home Retail, said the group's sales rise came against a "challenging backdrop of constrained seasonal product sales due to poor weather, on top of a deflationary pricing environment".

Home Retail has had an eventful past few months, selling off its DIY chain Homebase to Australian conglomerate Wesfarmers for £340 million in February and agreeing a £1.4 billion takeover by Sainsbury's a month later.

The deal is being looked at by the Competition and Markets Authority (CNA), but is expected to go through in the third quarter.

"Given the natural distraction that a transaction such as this can be for our colleagues, on top of the recent sale of Homebase, I am particularly pleased with our performance in the quarter," Mr Walden said.