Catalogue group expects further sales decline
Earnings at catalogue store group Argos, owned by conglomerate GUS, plunged by£59 million to£108.9 million during the first half.

Although one-off charges had an impact, Argos has been hit by the consumer downturn and expects like-for-like sales to 'remain in decline for the non-food, non-clothing market as a whole for the next 12 months.'

However, the retailer insisted that Argos and DIY stablemate Homebase had outperformed the market. Margin was maintained at Argos and enhanced at Homebase.

Argos Retail Group's total sales edged up by two per cent to£2.6 billion. Over the past six months the division launched its Extra offer through all Argos stores, giving shoppers greater choice. There are now 17,700 lines, compared with 13,200 a year ago. Prices on reinstated lines in the autumn/winter catalogue are five per cent lower than last year's and the proportion of directly sourced goods has climbed to 27 per cent from 21 per cent.

GUS also unveiled its timetable for the demerger of upscale fashion brand Burberry. Chairman Sir Victor Blank said: 'We have made very significant strategic and operational progress in the first half. We are now focused solely on ARG and [credit information arm] Experian.'

GUS's interim profits fell from£407 million to£376 million on sales up four per cent to£3.9 billion.

Investec analyst Mark Charnock said although Argos was suffering, it was well-placed for recovery. Space growth and the roll-out of the Argos Extra offer 'should drive mid-single digit sales growth over the next year'.

Steve Davies of Numis noted: 'Argos has done well to restrict its like-for-like decline given the current environment.' He said the performance of Homebase would be monitored given the tough DIY outlook.