Home Retail Group says Argos quarterly sales rise

Sales at Home Retail Group's Argos household goods chain rose for the ninth quarter in row and gross margins recovered, although the sales increase fell short of market expectations.

The retail group said like-for-like sales at Argos rose 1.2 per cent in the 13 weeks to August 30th, below analyst expectations of a 3.4 per cent increase.

Chief executive John Walden said he expected the group to deliver full-year profit in line with market expectations, but it would depend on the important Christmas trading period at Argos.

“We remain cautiously optimistic about the broader economic environment,” he said in a statement on Thursday.

“Key economic indicators seem to be improving, however retail spending in general has been inconsistent across both product categories and geographies, suggesting that there is not yet a sustainable, broad-based consumer recovery.”

Analysts expect the group to post full-year pretax profit of £127 million , up from £115.4 million a year earlier, according to Thomson Reuters data.

Electrical products such as TVs, video gaming and white goods sold well at Argos, offsetting a decline in tablets and slightly weaker demand for furniture, homeware and jewellery.

Sales at the chain totaled £901 million, and Argos reversed the 25 basis point fall in gross margins in the first quarter, to leave them unchanged over the first half.

Like-for-like sales at the company's smaller DIY arm Homebase rose 0.1 per cent, confounding market expectations of a 1 per cent fall after hot summer weather a year earlier sent sales growth to its highest point in a decade.

Total sales at Homebase fell 2.8 per cent to £390 million after it closed a net six store closures in the quarter.

Reuters