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.