General merchandise retailer Argos has today reported a 1.9 per cent rise in like-for-like (LFL) sales in its first quarter driven by strong sales of electricals and consumer electronics as the retailer also strengthened its multichannel operations.
For the 13 weeks ended June 1st 2013, total sales increased 1.2 per cent to £828 million as Argos saw positive performances continues from electronics, electricals and white goods thanks to the popularity of tablets and TVs which “more than offset” declines in weaker performing categories including video gaming and audio, the retailer said.
Commenting on the positive growth, Terry Duddy, CEO of Argos and Homebase owner Home Retail Group, said: “Argos has delivered a good start to the year driven by continued success in consumer electronics and electricals, supported by growing internet and mobile commerce sales.
“Overall, its trading has been consistent with our expectations.”
Last month, Argos posted its first LFL rise in five years as it began its digital overhaul, which will see the retailer close at least 75 stores over the next five years in favour of strengthening its online offering.
Over the quarter, total internet sales continued to rise, now accounting for 42 per cent of Argos‘ total sales while m-commerce sales soared 114 per cent.
While these results are to be applauded given the speed of the ongoing digital turnaround, Retail Consultant at analyst firm Conlumino Liz Faulkner, believes that Argos‘ must do more to realise its dream of becoming a digitally-led business.
She warned: “The core driver of Argos‘s success, the multichannel model, is vulnerable to replication, especially from rivals at the value-end of the market.
“Tesco and Amazon already offer online ‘marketplace‘ formats, which extend choice and price competitiveness.
“In addition, they are both undertaking efforts to increase their physical presence, with Tesco Direct rolling out click and collect across an increasing number of stores, and Amazon offering high street collection points via Lockers and Collect + stores.
“Actions by such competitors are eroding a key point of difference for Argos, a fact these more modest results may be alluding to.
“Argos will need to work on its differentiation if it wishes to remain relevant. Sharper branding, more inspirational online content and greater innovation in product mix will all help towards this goal.”
Home & DIY retailer Homebase also saw LFLs rise over the quarter, up 1.2 per cent following a strong performance across big ticket products.
Total sales grew by 0.2 per cent to £422 million though sales of seasonal products were impacted by adverse weather and represented 40 per cent of total sales while sales of remaining categories “were broadly flat.”
Duddy concluded: “Homebase produced a positive LFL sales performance, however seasonal sales were adversely impacted by the volatile weather and as a result its performance for the quarter was slightly behind our expectations.
“Whilst we expect consumer spending to remain subdued, we are on track with delivering our investment plans to drive the long term development of both Argos and Homebase.”
