Argos will launch Chad Valley, the toy brand bought from Woolworths’ administrators, this July and will consider similar opportunistic acquisitions to bolster its range.
Home Retail Group, Argos’s parent company, paid £5m for specified Chad Valley rights in January. The brand’s strong shopper recognition is expected to help consolidate Argos’s number one position in toys. Chad Valley is understood to have generated annual sales of about £65m for Woolworths.
The Chad Valley deal followed Home Retail’s £15m purchase of radio and TV brands Bush and Alba last year. Home Retail chief executive Terry Duddy said at Wednesday’s preliminaries that ownership of such brands provides Argos with the chance to strengthen its ranging. The retailer may also buy more brands. “We’ve got an open mind, dependent on the opportunities that arise,” he said.
Retail Knowledge bank senior partner Robert Clark said the strategy would reinforce Argos’s good, better, best pricing. “That architecture is what it’s all about for a mixed goods operator,” he said.
Home Retail revealed a 24 per cent fall in profits to £328m, just ahead of City expectations. Sales declined 1 per cent to £5.89bn.
Duddy said the performance showed the strength of Home Retail’s operating model but that he is planning cautiously for this year.