Argos boosts Home Retail

Its owner Home Retail Group, which recently launched a digital makeover of the high street business, now expects full-year profits to be ahead of city forecasts.

Argos sales jumped by 4.3 per cent to £501m in the eight weeks to March 2 and were up by 5.2 per cent on a like-for-like basis, despite weaker trading in homewares.

Home Retail, which also owns Homebase, announced plans in October to scale back circulation of its Argos catalogue and revitalise the business through its digital presence.

Its 700-plus stores have been kitted out with internet access and Wi-Fi, with a fast-track collection service and customer service for orders.

Internet sales now account for 43 per cent of Argos’ total revenues, up from 40 per cent a year ago, as more shoppers take advantage of the chain’s new tablet and smartphone apps, as well as click and collect services.

Home Retail hopes to grow Argos turnover from this year’s £3.9bn to £4.5bn in 2018 in an “ambitious but achievable” overhaul after a period of declining sales.

With the company now guiding towards pre-tax profits of £90m in the year to March 2, compared with city expectations of £84m, its shares jumped by 15 per cent today.

Mark Photiades, a retail analyst at N+1 Singer, said the boost to consumer spending from PPI compensation payouts and the demise of competitors such as HMV were helping Argos.

However, he added: “We remain cautious on the longer term outlook for the business believing that management’s targets look too optimistic and that more radical action will be needed, especially around the store portfolio.”