The owner of catalogue retailer Argos pulled the plug on its shareholder dividend today after revealing a 60 per cent plunge in annual profits.
Home Retail Group's decision to cut the payout - described as "pretty brutal" by one City analyst - triggered a further 12 per cent slump in shares of the beleaguered retail chain, which also owns Homebase.
The board said trading conditions, which caused a 20 per cent decline in the market for consumer electronics in the year, contributed to the removal of the full-year dividend as it looks to focus resources on its turnaround.
Profits for the group were £90.2 million in the year to February 25, which compares with £426 million in the 2008 financial year. Argos has dropped to £94.2 million from £376.2 million over the same period.
The results have fuelled speculation over whether Home Retail plans to cull any of its estate of 748 Argos shops and 341 Homebase outlets.
The chain has brought in consultants OC&C to help new managing director John Walden assess the Argos business but insisted that widespread store closures were not planned, given there were just seven loss-making Argos stores.
Philip Dorgan, an analyst at Panmure Gordon, said Home Retail needed to be "much more radical if it is to survive in an online world" and Argos would need a "significant store closure programme".
The group said around 230 Argos store leases were up for renewal in the next five years, meaning they could be relocated or closed, while 10 would close this year.
In a further shift of focus towards the internet, the group plans to launch a revamped Argos website ahead of Christmas.
It will also boost its product offering, with 24,000 lines available in its spring/summer catalogue and an additional 9,000 online-only products.
Meanwhile, Home Retail said a programme to refurbish its Argos store network was "progressing well", with a further 200 stores revamped during the period.
The group stressed that stores remained a "key component" of the Argos model, with collections on internet orders meaning nearly 90 per cent of all Argos sales involved shops in some way.
The group said multi-channel sales now made up 48 per cent of total sales at Argos, with 39 per cent from online, and mobile shopping accounting for 6 per cent.
The majority of Argos's 7.7 per cent decline in sales to £3.8 billion was down to the consumer electronics market, particularly televisions and video games, although laptops and tablets, such as Apple's iPad, continued to grow.
Nick Bubb, independent retail analyst, said it had been "another disastrous year for Argos" and scrapping the final dividend was "pretty brutal".
He was also disappointed at the lack of detail on future store plans.
Freddie George, analyst at Seymour Pierce Research, said: "We remain concerned that the decline in profits is structural and set to continue."
He added that Mr Walden would have to "adopt a restructuring programme reducing the number of stores", which would hit the company's strong balance sheet.
Homebase saw its like-for-like sales drop 2 per cent in the year, while operating profits plunged 50% to £22.8 million in the same period.
Big ticket sales such as new kitchens and bathrooms were lower at Homebase, the group said, as consumers continued to rein in spending.