Argos escapes retail gloom on high street

The introduction of a wedding list service combined with improved catalogue availability has helped Argos escape the gloom on the high street with a 43 per cent increase in profits in the first half. However, there was no news yesterday on how the company might spend its near-pounds 200m cash pile.

Argos said it was still considering acquisitions but had not yet decided whether a share buy-back would be the preferred course. It will make its decision by the end of the year.

The company has been linked with the British jewellery interests of Signet, the troubled former Ratners group that includes the Ernest Jones and H Samuel chains. The company declined to comment on any approach to Signet.

Pre-tax profits for the six months to June increased from pounds 15.3m to pounds 21.8m on sales up 15 per cent to pounds 475m. The dividend was increased by 43 per cent to 4.8p.

Argos introduced a wedding list service in March and already has 2,000 lists logged on with an average value of pounds 850 each. Argos says purchases can be made anywhere in the country and are deleted from the list, which is held on a central computer.

New multimedia-style terminals that enable customers to complete transactions without the help of a sales assistant have been less successful.

A trial in 21 shops will not be extended until there is more evidence that customers are willing to use them.

In October Argos will pilot a new style of shop that will not be based on a catalogue format. The number of superstores is also being increased. A further seven traditional sites will be converted to the superstore format. There are currently 43 with room in the market for 100, the company says.

Argos is also expanding its smaller shops and will pilot a mini-store format. Argos Direct, the home delivery operation, boosted sales 50 per cent to nearly pounds 29m.

Like-for-like sales improved by 7.2 per cent. Since the end of June sales have increased by 10-11 per cent though half of this was due to better catalogue availability. Last year the company ran out of catalogues and will this year increase its print run to 34 million, at a cost of around pounds 1 each to print and distribute. Rising paper costs will have an effect on the bottom line next year.

The company said sales in most sectors were strong except for DIY and office equipment. The best seller is a pounds 149 video recorder that is featured on the back page of the current catalogue.

Argos's shop on the Barclay Square "virtual shopping mall" on the Internet has performed poorly since its launch a few months ago. Mike Smith, the chief executive, said Argos had sold "hardly anything" on the Internet so far. "I think this kind of electronic shopping might be six or seven years away from widespread customer acceptance," he said. The shares fell 5p to 483p.

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