Like-for-like sales at Argos dipped 5 per cent in the last eight weeks of the year. Parent company Home Retail (HOME) blamed a weak electricals market, but also said that recent changes to the business, such as distribution systems and online functions, are taking time to bed down. This hurt customer service over peak trading and it will take another six months to resolve these issues.
The group's DIY chain Homebase also reported disappointing like-for-like sales and less margin progress than the City had been hoping for. All in all, we can expect like-for-like sales to remain in negative territory in the first half of the current financial year, prompting analysts to downgrade 2016 earnings forecasts by roughly 5 per cent. On a brighter note, the gross margin at Argos was up 100 basis points over the eight-week period, against expectations of a flat outcome, and group pre-tax profit for 2015 will come in at the upper end of the £120m to £132m guided range.
