The result compares with pounds 52.9m profit before tax the previous year, but that was depressed by a pounds 12.7m charge for closing its Chesterman furnishing business. Underlying profits were up 16.3 per cent on sales 10.6 per cent higher at pounds 1.1bn.
Mike Smith, chief executive, said that heavy price promotions played a part in driving up the group's sales volumes. Argos increased the number of products in its promotional leaflets by 50 per cent, while spending on advertising and promotions increased by a couple of million to pounds 40m, including catalogue printing costs.
Part of the sales increase was due to the opening of 24 new stores, including three superstores, but the group estimates that like-for-like sales were 7.3 per cent higher. Growth accelerated during the year, with second-half sales up 8.1 per cent compared with 5.9 per cent in the first six months. Furniture and jewellery were best-sellers.
Mr Smith said that sales increases so far this year were in line with the second half of 1993, but he cautioned that the rate of increase was likely to tail off.
The group also warned that future trading would depend on how much consumers were affected by the looming tax increases. It added that gross margins, which fell in the second half, could drop further as it kept its prices steady.
The group continued to generate cash, ending the year with pounds 171.1m, up from pounds 125m, while average balances grew pounds 29.3m to pounds 114.6m. But the fall in interest rates meant interest earnt fell from pounds 8.9m to pounds 7.2m.
The group is considering a number of ways to use the cash, including raising dividends. But Mr Smith said that a number of start- up ventures and acquisitions were also being examined.
Earnings per share were 18.6p, up from 11.7p or 16.2p excluding the Chesterman costs. The dividend rises to 8p from 7p, with a 5.65p (4.8p) final. The shares rose 4p to 359p.
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