Saturday, November 18, 2017

City tycoon bets that Argos won‘t have a Merry Christmas

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Crispin Odey, the founder of his eponymous $12.8bn London based hedge-fund firm, has hedged a notable bet against Home Retail group, citing that the “working-class brand” won‘t be able to thrive in the new, digital era

Odey has taken a short position over 1.9% of the Argos and Homebase parent company, equivalent to 15.4m shares. His fund took the position at the start of this month, just after Argos went on a discounting furore in the run up to Black Friday. The retailer‘s website crashed following unprecedented demand, forcing it to apologise profusely after a backlash of customer complaints. 

“They are having a hard and torrid time of it,” Odey told The Sunday Telegraph. “I think they will have a bad Christmas. They are really being destroyed by the internet, which is allowing people to shop outside that area.”

“I don‘t think their move to online is working,” added the city tycoon.

Two-thirds of households shop at Argos at least once a year, but Argos has been moving away from catalogues and competing with Amazon instead by launching same-day deliveries.

Home Retail issued a stark profit warning in October and has been closing down B&Q stores left, right and centre. There has been recent speculation about private-equity interest in Homebase but sources say that any bidder would be “foolish” to approach at this point.

“It remains to be seen if they can find a bidder who is interested enough and pays a good price,” Odey said.

Odey said he was waiting to see if trading improved just before Christmas, and will then take a view on the company.