Argos sales tumble as shoppers shun gadgets

ARGOS sales fell as it paid the price for consumers changing their shopping habits.

Sales of electrical items including TVs, tablets and iPods, which make up around half of Argos sales, were down. But although this dented the business it was offset by improved sales of mobile phones – up by 45pc – and other categories such as furniture and toys, including its Chad Valley toy brands.

As a result, in stores open more than a year, Argos sales fell by 2.6pc to £4bn.

Owner Home Retail Group, which is in the process of being bought by Sainsbury’s in a £1.4bn deal, revealed a £94.7m profit for the year to February 27, which was down nearly 30pc from the £132.1m it made in the previous year.

It also booked an £804m loss related to when Argos was purchased by the group back in 1998 – what it described as an accounting charge.

earlier this year Home Retail also sold DIY chain Homebase to Australian group Wesfarmers for £340m.

Wesfarmers plans to rebrand the chain as Bunnings and spend £500m on refurbishing its 265 stores.

The results of Homebase are also included in the figures from Home Retail Group, which saw total sales fall 1pc during the year to £5.67bn.

Chief executive John Walden did not comment on whether management would stay on after Sainsbury’s had taken over the company.

The takeover, which Sainsbury’s won after a bidding battle against South African retailer Steinhoff, is expected to complete later this year but needs approval from the Competition and Markets Authority.

Argos expects to hear from the CMA in August on whether further investigation is needed.

Sainsbury’s wants to buy Argos to create a retail giant selling food, clothing, electrical and home products with improved digital expertise. The combined Sainsbury’s and Argos business would sell 100,000 products from 2,000 stores. This would make it bigger than the clothing and general merchandise businesses of Tesco, John Lewis and Marks & Spencer.

Argos has more than 800 shops and employs 30,000 people while Sainsbury’s, which has 600 supermarkets and 750 convenience shops, has promised it will operate 2,000 sites.

Sainsbury’s already has a trial of Argos concessions in some shops and retail experts estimate it could close around 200 Argos sites and relocate them in its supermarkets.

Sainsbury’s likes Argos’s delivery expertise and we way it has modernised many stores to become ‘digitally led rather than ‘catalogue-led’.

It has converted 177 shops to the new format, which includes a delivery service of 20,000 products for same-day home delivery.

Internet sales grew 7pc during the year and make up 49pc of sales. However, more than 70pc of its shops are still in the ‘old’ format and it still prints more than 20m catalogues a year. Argos also announced a trial with mobile brand ee to open concessions in five stores.

It has also been trialling different versions of its digital-focused store and opened a small-format shop in London. Since it began delivery and collection service in the new digital stores earlier this year, internet sales have grown 13pc compared to the same months last year.

Home Retail shares rose 0.2pc, or 0.3p, to 170.5p.