Argos eyes electronic mail order: Warning of sales slide follows six-month profit of pounds 15.3m

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The Independent Online
OFFICE workers and rail travellers will be able to order irons, clocks or lawnmowers from their desks or station platforms under plans being considered by Argos, the catalogue retailer, to open electronic ordering points outside its stores.

Mike Smith, Argos's chief executive, said the group was talking to station operators and companies about installing electronic order points, although discussions were at an early stage. The first outlets are unlikely to be opened until next year at the earliest.

Argos is testing a system that allow customers to order electronically in 20 of its stores - at present shoppers write their requests on paper order forms - and is considering whether to extend it throughout the chain. Mr Smith said it was not yet clear that the extra sales generated by the electronic system were large enough to justify the investment that would be required to install it throughout the 331 stores.

The same technology could, however, be used for ordering points in stations and offices, or outside stores to allow customers to shop outside opening hours. Argos is also interested in home shopping, but Mr Smith said cable companies are asking too high a price for access to their networks.

Argos announced that it made pounds 15.3m profit before tax in the 24 weeks to 18 June, up 16.1 per cent on last time, on sales 12.8 per cent ahead at pounds 413m. But it warned that sales growth had tailed off in May and June and its shares fell 7p to 367p. Excluding new space, sales in those two months was 1.3 per cent compared with 6.7 per cent for the period as a whole.

Mr Smith said the slowdown appeared to be due to the impact of tax increases imposed in April; customers switching spending to clothes and holidays, and to price cuts - 80 per cent of items in its latest catalogue were at or below last year's prices.

Ten stores were opened in the period, three of them superstores, as part of Argos's plan to add 32 outlets this year. That will push capital spending up to pounds 41m, pounds 12m ahead of last time. Despite that, its average cash balance was pounds 146.3m, up from pounds 114.6m at its 1 January year-end.

Earnings per share were 3.37p, up from 2.93p last time, and the dividend was increased by 12.8 per cent to 2.65p.

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