Argos slump adds to Home Retail’s woes
SHARES in Argos owner Home Retail Group fell 13.3 per cent yesterday after it said the catalogue retailer’s sales fell more than expected in the past quarter.
Argos was hit hard by customers’ reluctance to buy expensive electronics and big-ticket household goods, causing its sales to slump 9.6 per cent to £817m in the past three months.
The fall was substantially larger than the 4-7 per cent fall that analysts had expected, while its gross margin fell a bigger-than-expected 75 basis points.
In contrast, Home Retail’s other high street brand Homebase saw like-for-like sales rise 1.6 per cent in the quarter, in line with market expectations, as sunny weather prompted customers to spend.
“Trading conditions, particularly at Argos, have proved to be more difficult and volatile than anticipated,” said chief executive Terry Duddy in an interim management statement.
“For Argos, the consumer electronics market represents a substantial proportion of its sales and has experienced a further significant decline. The difficulty of this market, together with the volatility of overall sales, has made the balance of the year more difficult to predict.”
Analysts said the sales fall could wipe up to 20 per cent off Home Retail’s full-year pre-tax profit. It issued a profit warning in March.