Argos continued its downward trend last week when it reported an 8.8% slump in like-for-likes in the 18 weeks to December 31.

Argos continued its downward trend last week when it reported an 8.8% slump in like-for-likes in the 18 weeks to December 31. That few were surprised speaks volumes. The City has become uncomfortably used to poor trading updates from the catalogue retailer, but that has not stopped analysts from continually urging boss Terry Duddy to take decisive action.

Duddy, however, remains steadfast. Argos has the right strategy, but it is being hurt by the harsh economic conditions, he says. True, there was no profit warning from the Home Retail camp post-Christmas, but owing to the unrelentingly steep nature of the sales declines, the assurance on earnings provided little comfort.

Argos’ problems, says Panmure analyst Philip Dorgan, are both cyclical and structural. “We think the company will need to go through a costly, hard and painful restructuring operation, involving significant store closures at Argos and, possibly, a rights issue,” he says.

Waiting for the upturn, adds Dorgan, is not an option.

Duddy disagrees, and sees no need for mass store closures. He believes that Argos needs the bulk of its 750 shops to develop its multichannel offer.

Argos blamed its latest sales fall on the market decline in consumer electronics categories. And it faces stiff competition from retailers that can offer customer service to explain how ever-more complex technology products work, including John Lewis and a transformed Dixons.

The latter reported its Christmas trading this week, and while like-for-likes were down 7% in the 12 weeks to January 7, chief executive John Browett said the retailer had a solid Christmas and a strong start to its January Sale. Dixons is looking relatively healthy, and Browett pins its renewed success to its three-year transformation strategy, which has service at its heart.

Just like Dixons four years ago, Argos needs a turnaround strategy if it is to remain relevant. The incoming Argos boss, whoever that may be, has a tough job on their hands.