Bluechip: Argos tills ring an unhappy note

FOR ARGOS to have messed up Christmas trading for one year is unfortunate; to have pulled it off two years on the trot looks like ineptitude, writes Richard Phillips.

Either way, the stock market's verdict has been damning: from the high of 800p the shares touched just over a year ago, they have fallen sharply to 416p today. Problems first surfaced around Christmas 1996. The absence of the normal build-up in October and November led Argos to expect a quieter Christmas than usual, and it hired less staff for the rush. In the event, there were too few staff to serve customers when the Christmas frenzy, which was short but intense, did arrive.

Now it has had to issue its third profits warning in a year because of another disappointing Christmas. Sales of toys, electricals, jewellery, clocks and watches were down by 5 per cent. Total sales for the group fell by 1.5 per cent for the five weeks to 27 December.

Argos will cut 230 jobs, but that is unlikely to make much of an impression on the bottom line, especially when it has committed to recruiting a further 1,000 staff to support the opening of 31 new stores this year.

Its proven, no-frills formula will continue to work, but Argos is being squeezed. Woolworths is regaining the high ground and offering a serious challenge. Argos should maintain an edge over its rivals, but it seems that mail order is making some inroads into its customer base.

The company has trialled home shopping, and will roll it out nationally this year. Orders are phoned in and can be delivered to the customer's home or picked up 24 hours later from the branch.

The shares still trade at 14 times 1997's full-year figures, if you accept analysts' forecasts that the group can make pounds 125m pre-tax - a pounds 20m cut from the previous forecast level. It is too soon to say that there is any evidence of a recovery under way: avoid.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate