Argos total sales fell 3.2 per cent year-on-year over the last quarter as parent company Home Retail Group struggled over Christmas, according to results published today.
The retail group’s other retailer Homebase also saw sales drop in the 18 weeks to January 1st, with like-for-like (LFL) trading down 1.2 per cent and total sales lower by 2.8 per cent compared to the same period in 2010.
LFL sales at Argos fell 4.9 per cent in the quarter with year-to-date LFL trading now down 5.7 per cent and gross margin in those 44 weeks reduced by 75 base points.
Home Retail Group CEO Terry Duddy said: “Argos has performed in line with our original expectations for its peak period, despite some particularly challenging and volatile trading conditions in the build-up to Christmas.
“Homebase has again traded well in what is for them a less seasonally important selling period. We now expect group benchmark profit before tax for the year to be around the mid-point of our previously guided range of £250-275 million.”
Internet sales became ever more important to Argos during the quarter, with total online trade of over £700 million making up 38 per cent of the retailer’s overall sales.
Homebase reduced its store portfolio by four to 341 during the 18 weeks, whilst Argos unveiled six outlets and closed one to end the period with a total of 754 shops.
Matt Piner, Senior Retail Analyst at Verdict Research, commented: “Argos has struggled for consumer attention as the supermarkets promoted more loudly and aggressively, missing out on gifting in video games and televisions in particular.
“Sister chain Homebase benefitted from some recovery in demand for big ticket items, no doubt boosted by the prospect of VAT rise, but overall revenues declined as consumers reined in spending.”
Full-year results will be published by the group in April and it now looks likely that the decline in profits seen in its first half results is going to continue.