Argos upbeat despite a poor Christmas

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The Independent Online

Home Retail Group yesterday told the City to upgrade their profit forecasts despite posting disappointing Christmas sales at its Argos and Homebase chains.

Terry Duddy, the chief executive, said the group had opted to protect its margins by cutting back on promotions in what was a "difficult" general merchandise market.

At Argos, the big story was its 37 per cent increase in internet sales over the quarter to 6 January, which meant that the chain took one in every £5 spent online. Mr Duddy said the chain shook off the challenges from Tesco and Woolworths, which are both trying to emulate the multi-channel retail model that Argos pioneered.

"Thirty-five per cent of Argos' sales were made across more than one channel, making us the clear leader in multi-channel among our high street peers," he said.

Flat-screen televisions and video games sold well but demand for satellite navigation kits and portable dvd players waned. Jewellery sales were poor reflecting a consumer trend towards better quality gold than Argos sells.

Mr Duddy hit out at Woolworths' attempt to muscle in on its catalogue market, saying: "They featured a lot of toys [in their new catalogue] but that doesn't seem to have translated into sales." He said toy sales were flat at Argos, which suggested Woolworths' market share gains in toys came from some of its small competitors.

Underlying sales rose by just 0.2 per cent in the three months at Argos, which was a sharp slowdown from the 7 per cent growth posted at the start of the year. Total sales increased by 2.3 per cent.