Disappointing growth figures hit GUS shares

GUS, the Argos and Homebase retailer, saw its shares knocked 5 per cent yesterday after it issued a third-quarter trading update that left some investors disappointed with organic sales growth of 3 per cent.

Some analysts were looking for growth of 4.5 per cent in same-store sales growth but the company insisted the performance of the business in the three months to 3 January was on target. David Tyler, GUS's finance director, said: "Total sales were up 10 per cent and that's what is driving our profit figures. Our aim is to maximise return on capital, not like-for-like-sales."

GUS said it had not discounted heavily, which was one reason organic sales were lower than expected. However the company succeeded in increasing its gross margins, even though the mix of products it sold during the quarter shifted towards consumer electronics, where margins are lower.

GUS said that Argos was benefiting from improvements to its supply chain, which were expected to deliver £25m of cost savings this year. "GUS is in good shape," said Mr Tyler.