Structural issues are often blamed for Argos’ declining sales.
Structural issues are often blamed for Argos’ declining sales. The retailer’s numerous and uninspiring shops, based around a 1,500 page catalogue, seem out of kilter with the changing face of retail – store format and customer service are more important than ever in persuading cash-strapped Brits to part with money.
But as parent Home Retail prepares to update the market next week on its second quarter, there may be some light at the end of the tunnel.
Argos’ like-for-likes are expected by Investec to be down “only” 0.8%, following a 0.2% slip in the first quarter. The “broadly flat” first-half result should mitigate market fears about structural decline issues, according to Investec analyst David Jeary. Despite raising concerns over the outlook for Argos’ long-term profitability, Jeary moved from sell to buy.
The subsequent rise in the Home Retail share price will have been welcomed at Argos, which has had a tough time of it in recent years as everything from its poor electricals sales to its sprawling 750-strong store estate have been called into question.
Yet last week that store estate came into its own, when Argos found a loud and influential supporter in US bookseller Barnes & Noble.
The books retailer chose Argos – along with John Lewis, Foyles and Blackwell’s – as one of its retail partners to sell its successful ebook, the Nook.
Barnes & Noble explicitly said it had chosen Argos so that it could “make the Nook easily available to the UK population”, and cited the fact that 90% of Brits live within 10 miles of an Argos store.
There are few other retailers – bar the supermarkets – that can claim the same, and Home Retail boss Terry Duddy, who has relentlessly argued that Argos’ numerous stores are integral to its offer, will be hoping this latest nod of approval may confound the critics, even if it doesn’t quite silence them.