Stephen Foley: Argos is in crisis. When will its management admit it?

 

Outlook If only it was just a publicity stunt: "Argos announces joint venture in China, in vain attempt to distract from its profits wipeout in the UK."

Sadly, management really will be putting time, effort and millions of pounds of shareholders' money into cracking, or trying to crack, the world's most alluring emerging market. All of which means less time, effort and money to focus on the large and urgent problems here at home.

It is six months already since Argos lost its managing director, and Terry Duddy, chief executive of the parent company Home Retail Group (HRG) took over day-to-day control. The company has been travelling headlong towards crisis all this while. These have been six months in which it should have been reassessing its strategy, and at the very least starting to consolidate its 750 stores. Investors who watched their shareholding plunge another 15 per cent yesterday will rue the fact that these six months have been wasted.

This is hardly an unforeseen crisis, though the scale of the decline in sales on show in yesterday's results was more awful even than many had feared. Its consumer electronics business is in freefall, down 20 per cent on last year, and there will be no let-up in competition from internet-only retailers such as Amazon on the one hand, and ever-expanding supermarkets on the other. Consumer habits are changing and, with inflation and the recession biting, they are changing ever more quickly. The UK high street is over-supplied with retail chains and retail outlets.

China – which, as the salivating Mr Duddy pointed out, has a retail market worth £750 billion and growing at 8 per cent a year, dontcha-know – could be transformational for Argos, but while it has picked a decent joint venture partner in the appliance maker Haier Electronics it is unclear why the Chinese should take to the Argos brand over any of the other Western names fighting to get noticed. Long-suffering HRG shareholders will note that Argos made a similar plan to take India four years ago, without success.

HRG must cut the dividend and reinvest the proceeds in a store closure programme for Argos. The company hinted it is finally open to such a thing by pointing out 185 of its stores have their leases up for renewal or have lease break clauses in the next five years.

Shareholders are overdue for something a little stronger than hints.

PROMOTED VIDEO
News
ebooksNow available in paperback
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

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible