Argos reports dip in electrical sales in the middle of takeover battle

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Although overall sales were up and the online business accounts for over half of trading

Argos owner Home Retail Group says trading “improved” for the final eight-week period for the financial year ended 27 February 2016.

The group’s Homebase DIY business was recently sold off and electricals and homeware retailer Argos is in the middle of a takeover battle.

John Walden, chief executive of Home Retail Group, said: “This has been another rather eventful period for the group, during which we completed the sale of the Homebase business and both J Sainsbury plc and Steinhoff International Holdings N.V. announced possible offers for the acquisition of the remaining group.

money poundsI am pleased with the continued improvement in Argos’ sales performance in the period, together with the continued progress in the Argos Transformation Plan to become a digital retail leader.”

He said: “We expect that group benchmark profit before tax for the financial year ended 27 February will be in line with the current consensus of market expectations of £93 million. We also expect that the group’s year-end cash balance will be significantly stronger than previously anticipated at around £625 million.”

Total sales at Argos increased by 1.9 percent to £515 million for the eight weeks. Net new space contributed 3 percent, principally as a result of the 94 digital concessions and collection points opened within the past year. The store estate increased by a net 90 stores to 845 in the year.

Like-for-like sales declined by 1.1 percent in the eight week period, however the “cannibalisation impact” on like-for-like sales as a result of the additional new space was around 1 percent, and “therefore underlying like-for-like sales were broadly flat in the period”, said Argos.

But sales of electrical products, such as video gaming, tablets and white goods, declined. Mobiles however continued to “deliver good levels of growth”, Argos said.

Internet sales grew by 13 percent in the period and represented 51 percent of total Argos sales, up from 46 percent for the same period last year. Within this, mobile commerce sales grew by 15 percent to represent 28 percent of total Argos sales, up from 25 percent in the prior year.

@AntonySavvas