Argos has continued to drag down the performance of its parent Home Retail in the first half, as group pre-tax profit slumped 70% to £28m.
Argos operating profit plummeted 94% to £3.4m in the 26 weeks to 27 August 2011.
Total sales dropped 7.6% to £1.7bn. Like-for-likes fell 9.1% as sales in consumer electronics dipped.
The retailer has revealed that it will launch into China with a joint venture company “to develop a multi-channel, general merchandise retail business”. It will partner with Haier Group, a home appliance manufacturer and launch in 2012.
Home Retail total sales were down 6% to £2.6bn.
Its DIY arm Homebase again notched up a better performance in comparison to its sister chain Argos. Homebase like-for-likes were flat in the period, however operating profit fell 35% to £29.9m.
Total sales at Homebase fell 1.8% to £840m. Home Retail said Homebase gained market share in the period.
Home Retail chief executive Terry Duddy said: “Homebase delivered another robust performance in its peak trading period. Core customers at Argos have continued to be under greater pressure and there were ongoing challenging conditions across several product categories, most notably consumer electronics.
“As we now enter our busiest trading period market conditions remain both weak and volatile, and in these early weeks of the second half we have not seen the improvement in sales that we had anticipated.
“We are well positioned operationally and we will continue to shape the future of shopping for our customers, ensuring we bring unrivalled convenience and value to customers’ every day lives, whether shopping at home or on the move.”
At Argos, multi-channel sales “have continued to grow” and now represent £770m or 46% of Argos’ total sales.
The retailer said the fastest growing channel continues to be online Check & Reserve, which now represents 22% of all sales.
Purchases from mobile phones now make up 4% of total sales.
IHome Retail will have a 49% holding in its new China joint venture. It is expected Home Retail will invest £22m in the business over two years.
In the period the retailer launched Argos TV shopping channel as well as new lines in the catalogue including children’s books, children’s and adult clothing and gifting.
Argos said that it is realigning its property portfolio, taking advantage of 150 store lease renewals and 35 store lease break clauses over the next five years.
It said it will optimise its store network by relocating or closing some older stores and opening some new stores “if attractive sites become available”.
In the current financial year, Argos expects to open 15 stores and close a similar number.