Terry Duddy, CEO of Home Retail Group (HRG), claimed last night that his firm was not going to close any of its Argos stores in the UK despite calls for a strategy change by analysts.
At a media dinner on Tuesday September 27th 2011, the boss of Britain’s largest household goods retailer revealed that extensive research had been carried out to try and find out why like-for-like sales at Argos declined 9.6 per cent year-on-year during it first quarter.
According to Reuters, Duddy said that the study vindicated the current multichannel strategy for the variety retailer and that analyst’s recent calls for a change of direction were unfounded.
“There were no eurekas,” Duddy explained.
“It was a full and hard check. It was a hard reflection of where we were and it tells us that we believe that actually our strategy’s right.
“And we know that that isn’t necessarily what everybody wants to hear, because at this level of performance people are expecting a sort of transformation.”
Currently Argos has 754 stores and critics had suggested that a reduction in its portfolio, cuts to its cost base and a slimming of its catalogues could all help to reenergise the stalling trader.
Most Argos stores are on 15-year leases, with the average outlet having seven years left on its contract, and so Duddy argued exiting a large number of them quickly would not be possible.
Homebase, the other half of the HRG business, has seen posted resilient sales for its home & DIY products over recent quarters despite low consumer spending but Argos’s problems seem to be more ingrained having posted a drop in profits of 18 per cent during its last full-year period ending in February.
Duddy admitted last night that he does “not know when things are going to get better”, but he believes the future points towards expansion rather than retraction for the UK retail giant.
“Our view looking forward is we think we can grow our store estate further. The thing that we’ve got to do is not just be great in the markets that we’re in but get into new markets,” Duddy added.
The retail boss predicted that the future retail landscape is likely to have less specialists than today and that recent investment in TV shopping, mobile apps and childrenswear shows Argos’s ambitions.