Sales slide at Argos as shoppers stay home
Sales of home goods from Argos fell more than expected in the past three months as shoppers cut back on expensive electronics, its owner Home Retail Group has said.
Home Retail, which also owns home and garden DIY chain Homebase, said Argos like-for-like sales slumped by 9.6 per cent to £817m in its first quarter, more than the 4-7 per cent fall that analysts expected.
In contrast, recent sunny weather prompted customers to spend at Homebase, which saw like-for-like sales rise 1.6 per cent in the quarter, in line with market expectations.
“Trading conditions, particularly at Argos, have proved to be more difficult and volatile than anticipated,” said Home Retail chief executive Terry Duddy in its 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.”
Gross margins at Argos fell 75 basis points and were down 50 basis points at Homebase.
Home Retail, the UK’s biggest household goods retailer, has come under fire in the past week for recommending pay rises to Duddy and finance director Richard Ashton despite the company issuing a profit warning and the current falling sales.
Home Retail has previously forecast a low-to-mid single digit like-for-like sales decline at Argos in the 2011-12 year, with like-for-like sales at Homebase broadly flat, and a marginal reduction in Argos’ gross margin and marginal improvement at Homebase.