Argos is making an aggressive pitch for better-off customers and winding down its traditional catalogue sales as part of a £300m bid to revive the struggling retailer's fortunes.
Terry Duddy, the chief executive of Argos' owner Home Retail Group, is battling to turn around the ubiquitous high-street chain, which has been squeezed by fierce competition from the online behemoth Amazon and from the supermarkets.
Mr Duddy is looking to extend the appeal of the store beyond less affluent Argos customers – suffering worst amid recession and high inflation – by getting higher earners to shop more often and push sales to £4.5bn by 2018. He hopes to achieve the goal with a bigger push on e-readers and tablets as well as middle-class brands such as Habitat.
He said: "We think there's an opportunity for consumers from upper demographics to shop with us a bit more often."
The company will also close or relocate 75 of its 736 stores.
The urgency of the overhaul was underlined by operating profits of just £3.3m on sales of £1.69bn in the six months to September – Argos in effect making just 20p for every £100 spent in its stores – although same-store sales edged 0.6 per cent ahead.
Mr Duddy said the retailer was moving to keep pace with fast-changing shopping habits: "Things have moved so rapidly in the last three years. Our iPhone app accounts for 7 per cent of sales, and we expect this to be 10 per cent by the end of the year."
Home Retail, which also owns the DIY chain Homebase, posted pre-tax profits of £18m. This was 37 per cent down on last year, but well above the City's much bleaker forecasts of £12.2m.
Details of the turnaround plans failed to convince many City analysts. Freddie George, from Seymour Pierce, said: "There is little in the current strategy that, in our view, will arrest the current decline." Its shares rose 1.6p to 105.7p.