Outlook: First taste of Argos's defence

FOR A retailer that never seems to have moved out of the 1970s, Argos has suddenly come over all designer trendy. Instead of its usual grey presentations the company yesterday hired the London Weekend Television studios to regale audiences with its new retail strategy. There were lots of yellow kettles and bright red vacuum cleaners everywhere and, up on the podium, new chief executive Stuart Rose was reading from his autocue with all the aplomb of a seasoned Oscars presenter. Amazing what a hostile bid can do.

But strip away the gloss and the key issue is how much Argos' new "vision" will add to the share price compared to the cash offer Great Universal Stores has tabled.

Certainly, much of yesterday's thinking was common sense and is what GUS would probably do given the chance. Spending pounds 5m on giving the stores and catalogue a makeover to make them more user-friendly seems sensible. Adding a wider range of goods - including more at higher price points - increases consumer choice. And selling additional lines such as greeting cards, wrapping paper and videos in the stores could add extra revenue.

The this is surely just the appetiser. The real meat will come next week with the defence document. Mr Rose has pledged to increase margins by a full percentage point over two years. On some calculations this could add over 70p to the share price. The promise of a special dividend next week could turn what has been a dull bid into a decent fight. But Argos is still relying on its shareholders making a leap of faith. And it will take more than a slick presentation to get them on board.

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