Argos owner Home Retail Group expects full-year profits to come in at the low end of expectations after suffering a second quarter sales fall at flagship chain Argos.
The like-for-like trend at Argos improved on the previous quarter but was still down 5% and the catalogue store chain’s total sales fell 2.8% to £924m in “challenging” trading conditions.
Sister chain Homebase maintained flat like-for-likes and total sales fell 1.1% to £396m.
Home Retail chief executive Terry Duddy said first half “benchmark” profits are likely to be down by between 20% and 25%. The full-year figure will depend upon peak trading but he expects it to be between £250m and £275m – the bottom of City analysts’ forecasts.
At Argos, categories such as computers and white goods performed well but demand for big-ticket items such as furniture was hit by difficult economic circumstances. At Homebase, however, sales of big-ticket goods rose.
Argos’s gross margin fell by 125 basis points, mainly a result of adverse currency and shipping rates. The same factors brought Homebase’s margin down by 75 basis points.