Bigger range helps Argos rebound from Christmas blues

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The Independent Online

Gus Eased concerns yesterday that its high street star Argos was faltering when it revealed that sales growth at the multi-purpose retailer had accelerated after a weaker Christmas.

Gus Eased concerns yesterday that its high street star Argos was faltering when it revealed that sales growth at the multi-purpose retailer had accelerated after a weaker Christmas.

The group said the launch of an expanded summer catalogue had helped sales at Argos to outstrip its retail rivals, prompting analysts to upgrade their full-year profit forecasts.

David Tyler, the finance director, said like-for-like sales at Argos had soared by 7 per cent during its fourth quarter, after rising by 3 per cent over Christmas. During the six months to 31 March, Argos's underlying sales rose by 4 per cent.

Separately, Mr Tyler hinted that the group was preparing to spin off its credit rating agency, Experian, following its partial flotation of Burberry, the luxury goods group, 18 months ago. "A gradual unravelling is the strategy," he said. The group is planning to float its South African retailing arm "within months", he added.

The strong rebound in sales at Argos was driven by offering customers 12 per cent more goods to choose from in this summer's catalogue. It broadened its furniture, whitegoods, consumer goods and jewellery ranges, Mr Tyler said, adding that the move had helped it to "take market share in just about all of our areas".

"The big are getting bigger in UK retail. The winners are winning even more," he said.

There was good news, too, from Homebase, which saw its underlying sales rise by 5 per cent during the second half. Although like-for-like sales at the home furnishings chain slowed slightly during its fourth quarter, this was against tougher comparisons, Mr Tyler said.

GUS is repositioning Homebase away from the hardware chain B&Q into the "softer" furnishings market by selling more products such as vases and candles.

Meanwhile, Experian also performed strongly, with worldwide sales rising by 10 per cent at constant exchange rates. In North America, acquisitions helped sales increase by 5 per cent at constant exchange rates, despite a slowdown in the mortgage re-financing market.

But taking into account currency movements, sales fell by 7 per cent.

The company's joint brokers, Cazenove and Merrill Lynch, both nudged their profit forecasts higher, to £825m and £820m. GUS shares rose 9p to 760p.

Mr Tyler said the group was "reviewing its balance sheet" and would report back next month, raising expectations that it might return some cash to shareholders. "We are open-minded about the future. We will do what seems right for shareholders," he added.

Given the buying benefits of owning more than one retailer, Mr Tyler said he "wouldn't reject the possibility" that GUS might acquire more retail businesses. It bought Homebase from the private equity group Permira in December 2002.

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