Argos owner 'to ditch dividend' after dire quarter
Terry Duddy, chief executive of the Home Retail Group, will this week have to defend another set of dire fourth-quarter sales at Argos amid suggestions that the group will ditch its final dividend.
While profit and dividend figures will not be unveiled on Thursday, the City has already pencilled in a calamitous 61 per cent fall inpre-tax profits to £99m for the year to 25 February at Home Retail,which also owns the DIY retailer Homebase.
The consensus forecasts lay bare the mountain that Mr Duddy and John Walden, the new managing director of Argos who joined last month, have to climb in order to turn around the fortunes of the general merchandise giant.
Underlying sales at Argos are forecast to fall by 7.4 per cent in its fourth quarter, with its gross margin – the difference between the price at which a retailer buys stock and the price it is sold for – falling by a further 50 basis points. However, Mr Duddy is likely to point to the rate of decline in its sales slowing, as the 750-store retailer's like-for-like sales tumbled by 8.8 per cent over 18 weeks to 31 December.
Many retailers are thought to have suffered difficult trading so far in 2012, with the British Retail Consortium reporting a 0.3 per cent fallin underlying sales across the sector in February.
While Homebase is expected to have performed better than its stablemate, the City still thinks there will be a 3.1 per cent fall in like-for-like sales in the DIY retailer's fourthquarter.
Philip Dorgan, the analyst at Panmure Gordon, forecasts that Home Retail will axe its final-year dividend and follow suit for the next two years, after it paid 10p last year. He also slashed his pre-tax profit forecasts for Home Retail's current financial year and 2013-14 by 34 per cent and 45 per cent respectively.
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