Argos Suffers Profit Blow Ahead Of Sainsbury's Deal

Argos owner Home Retail Group said shoppers buying less TVs and fridges had led to a drop in profits.
The group reported a 28% drop in annual profits to £94.7million on sales down 1% to £5.6billion.
Total sales at Argos, with 845 stores, were flat at around £4billion but down 2.6% on a like-for-like basis. Its operating profit fell to £83.1million from £129.2million.
Internet sales climbed 7% helped by new collection and delivery options with mobile commerce sales rising 10%.
It said demand for electrical goods such as TVs, tablets and white goods had suffered but had had picked up for toys, sports equipment and furniture. It added new ‘aspirational’ brands such as Nespresso coffee machines over the period.
Home Retail Group chief executive John Walden said increased promotions, revamping stores and opening new digitally formatted stores had also hit its figures. “There is work to be done at Argos but the building blocks are now in place,” he said.
Sales at Homebase were down 3% in the period. The group sold the Homebase chain for £304million to Australian group Westfarmers in February.
It has also recommended a £1.4billion takeover offer from supermarket Sainsbury’s for the Home Retail Group. The deal is expected to go through in the third quarter of the year.
Walden said: “The past year has been a landmark period for the group. There will be significant business benefits in the combination with Sainsbury’s, including benefits of scale and opportunity to accelerate the work begun under out Transformation Plan. We are well positioned for an exciting future.”