Home Retail Group failed to gain a pre-World Cup TV sales increase, as several rivals did, as overall like-for-like sales at flagship chain Argos fell 8.1% in the 13 weeks to May 29.
TV sales were down 10% on last year, which Home Retail Group chief executive Terry Duddy said reflected strong sales of the product in the comparable period when they rose about 30%.
“Overall the market [for TVs] has not grown, it is still in decline,” he said. “The World Cup has not moved the market back to growth.”
But Argos’s weak performance in TVs contrasted with electricals specialist DSGi’s report that TV sales were ahead 140% on last year, and Comet has revealed a 73% lift in TV sales over the bank holiday weekend before the World Cup.
Argos’s total sales dropped 5.2% to £889m.
Oriel Securities analyst Ramona Tipnis said: “Clearly pricing has been an issue and with entry-level price players getting ever more competitive in their drive for market share, Argos’s recent shift toward own-brand product might well be hurting it.
“This was well demonstrated in the TV segment, with anecdotal evidence suggesting that higher-priced branded TVs have had an easier time of it in the run-up to the World Cup.
“The result is that the specialists have done well and at the commodity end of the market, it would appear that the supermarkets have been more active,” said Tipnis.
Duddy said Home Retail still expects profits to be in line with last year when they hit £293m. “This is not a big quarter for Argos,” Duddy noted. “There is still a lot to play for.”
Investec analyst David Jeary agreed that any change to profit expectations would not make sense at this stage because Argos’s Christmas performance will be “crucial” to the full-year performance.
Home Retail’s DIY chain, Homebase, performed better than expected in the period when the rate of like-for-like sales decline improved to 1.4%, against strong comparatives last year. Total sales were also down 1.4% to £459m.
Tipnis said Homebase’s premium position and “skew towards the female shopper” means there is less flexibility than Argos.
“Going down the route of self service tills is not an option and so the focus has to be on driving footfall and keeping price perception on the level,” she said.