Argos-owner on the slide

SHARES in Home Retail Group slipped almost 16pc as it warned that profits would be lower.

The Argos and Homebase owner said it was feeling the added cost of trying to compete with firms such as Amazon by offering same-day home delivery and it had concerns over Christmas trading.

Chief executive John walden insisted the business has a future after one analyst said it is ‘staring into an abyss’ and questioned whether it could be the next woolworths – the defunct chain.

Home Retail fell 23.7p to 126p after walden said: ‘Trading at Argos during this year’s Christmas seems less predictable,’ adding that profits will be ‘below the bottom end of the current range of market expectations of £115m to £140m’. This would be well down on last year’s figure of £132m. Tony Shiret, a respected veteran analyst at Hong Kong bank Haitong, said he suspects management can see that it will have to drop prices and launch expensive promotions to attract shoppers over Christmas.

Underlying sales at Argos fell 3.4pc for the 26 weeks to August 29 which walden blamed on a slump in demand for televisions and tablets as well as seasonal summer items such as lawn mowers.

Homebase performed better with sales up 5.6pc.

Group profit increased to £23.4m from £13.5m on sales of £2.6bn. The interim dividend was flat at 1p. Shiret said: ‘The unwinding of the Argos story leaves us needing to be persuaded that it is not staring into an abyss.’