Argos like-for-likes down 2.2%
Home Retail Group, the owner of Argos and Homebase, has reported a mixed trading performance at Argos with like-for-like sales down by 2.2%.
In the 18 weeks to 2 January, total sales at Argos grew by 0.9% to £1,837 million. Net new space contributed 3.1%, principally as a result of 95 digital concession stores in Homebase and Sainsbury’s stores added within the past year. In the recent trading period the store portfolio increased by a net four stores to 844.
While like-for-like sales in electrical products at Argos continued to fall driven by declines in video gaming, tablets and white goods, the drop was partially offset by “good growth” in mobiles and positive like-for-like performances in non-electrical product categories such as toys, freetime and furniture.
Home Retail Group said Argos performed well over the Black Friday period, achieving total sales growth of 41% on Black Friday itself, its highest ever sales day, and 23% growth during the week of Black Friday. Digital sales increased by 45% for the same week, with digital participation accounting for 62% of total Argos sales in the week versus 52% last year.
However, consumer enthusiasm for Black Friday resulted in sales shifts from both the weeks before and after the event. Furthermore, during December, Argos experienced a 13% reduction in traditional store walk-in sales, exacerbated in high-street and shopping centre stores, while digital sales overall increased 10% during this same period.
John Walden, chief executive of Home Retail Group, said: “Whilst Argos trading performance was mixed, I am pleased that we made material steps forward in the Argos Transformation Plan.
“Total sales at Argos increased 0.9%. They were affected by volatile trading patterns resulting from particularly strong sales during Black Friday week, a shift in consumer demand from both the weeks before and after Black Friday, growth in digital transactions, reduced store footfall particularly on the high streets, and the continuing effects of price deflation.”
Meanwhile, like-for-like sales at Homebase increased by 5% in the period with sales growth broadly across all product categories, but particularly in big ticket kitchen and bathroom products.
Total sales at Homebase declined by 4% to £434 million as a result of the ongoing store closure programme, with a net six store closures in the period, resulting in a total of a net 31 store closures year to date. This has reduced the portfolio to 265 stores.
Walden added: “The Homebase Productivity Plan, which includes an aggressive store closure programme, overhead reductions and customer proposition improvements, has begun to position Homebase as a smaller, higher quality and more efficient business.
“Yesterday we announced that we are in advanced discussions to sell Homebase, which would provide good value for shareholders and a growth opportunity for Homebase colleagues. The potential transaction would allow the group to focus on Argos and its Transformation Plan, with an improved balance sheet and financial position, which I believe would represent an even greater opportunity for building long-term shareholder value.“
As a result of the recent trading, Home Retail Group now expects group benchmark profit before tax for the financial year ending February will be around the bottom of the current range of market expectations of £92 million to £118 million.
