Black Friday hits Argos Christmas
- Credit: PA
Argos has reported flat sales following a “volatile” Christmas trading period in which high demand for Black Friday promotions skewed its performance.
Home Retail Group said Argos’s like-for-like sales for the 18 weeks to January 3 were broadly unchanged at 0.1% higher, as strong TV and video gaming sales offset a decline in jewellery. Total sales lifted 0.8% to £1.8 billion.
Chief executive John Walden said Argos sales were up by 45% on Black Friday after it received more than 13.5 million visitors to its digital channels, three times last year’s number of visitors.
But he added: “The draw of discounts affected trade both before and after that busy weekend as consumers satisfied their Christmas shopping lists with bargains.”
As a result of the trading volatility, Argos pursued a more cautious trading stance over the festive period to protect margins.
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Home Retail’s DIY chain Homebase saw total sales fall 2.7% to £451 million, as the group closed 12 stores in the period, in line with its October plan to close a quarter of its 323 stores by 2018 due to poor sales performances. Like-for like sales at Homebase rose 0.6%.
The group remains on track to meet full-year profits targets but shares opened 5% lower today after the like-for-like sales figure for Argos came in below the City forecasts for growth of around 2%.
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During the seasonal period, Homebase sold 120,000 real Christmas trees and almost half a million pots of white emulsion paint as customers looked to freshen up their homes.
In October, Mr Walden announced a three-year plan to help Homebase combat the threat of online rivals and the rise of a generation “less skilled in DIY projects” in a sector already squeezed by the economic downturn.
The shake-up will aim to improve product availability and presentation and instil “a culture of both efficiency and great customer service in stores” and will also see it take advantage of online technology developed by Argos.
A number of Argos stores have been refitted over the past 12 months and now include fast-track collection and ordering from iPads rather than catalogues.
Stephen Ward, commercial director of retail consultancy Conlumino, said the decision by Argos to limit promotions meant that the growth it attained was done so profitably and with a reasonable improvement to margins.
He said: “However, there is a slight concern that a less aggressive stance on pricing - in a year that promises to be cut-throat in terms of promotions - will alienate some core Argos shoppers and damage growth. Ultimately, even with margin improvements, this could start to cost the company profit.”
Argos trades from 756 stores while the Homebase portfolio has been reduced to 304 outlets.