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Argos sales lift sees HRG raise PBT expectations


General merchandise retailer Argos saw total sales lift 1.6 per cent to £1.7 billion during the festive trading period, despite store closures as it seeks to re-establish itself in the digital space, figures released today reveal.

For the 18 weeks to January 5th 2013, like-for-like (LFL) sales rose 2.7 per cent and such growth has seen Argos owner Home Retail Group (HRG) increase its profit expectations for the full-year by £10 million ahead of the current market consensus of £73 million.

Like electrical retailer Dixons, which today reported an eight per cent increase in UK LFLs, Argos has benefitted from the growing popularity of tablets, strong sales of which offset weaker trading across its homewares and jewellery categories.

Although gross margin declined by around 50 basis points over the period, the retailer’s move to close at least 75 stores as part of a digital overhaul saw its multichannel performance strengthen overall sales.

HRG CEO Terry Duddy said of the results: “Argos had a good peak trading period building on its first half performance.

“Internet sales for the year to date now represent 42 per cent of Argos’ total sales, within which mobile commerce sales grew by 125 per cent as our customers took advantage of new tablet and smartphone apps and improved website functionality.

“As a result of good operational management and cash generation over the peak trading period, we now expect group benchmark profit before tax for this financial year to be about £10 million ahead of the current market consensus of £73 million and the year end cash balance to be in excess of £300 million.

“Whilst we anticipate consumer confidence will remain subdued in the coming year, we are focussed on delivering the transformation plan to reinvent Argos as a digital retail leader and the ongoing development of the Homebase proposition.”

Home & DIY retailer Homebase reported negative sales with total swales dropping 4.5 per cent to £453 million as LFLs declined 3.9 per cent as big ticket sales continued to disappoint.

Matt Piner, Lead Consultant at Conlumino, believes that Homebase has a tough road to recovery.

He said: “Homebase has recorded another weak quarter, but this has to be put in the context of a DIY market that continues to contract and has generated similarly negative performances from other players in the sector.

“With consumers prioritising gifting and so on over the festive period, home improvement and spending was even more on the backburner.

“There are now crucial challenges ahead for Homebase as it looks to get things back on the track through the January sales and into Easter.

“However, with the housing market still depressed, 2013 looks set to be another tough year.”

Published on Thursday 17 January by Editorial Assistant

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