Argos reports 3.3% rise in LFL sales

Home Retail Group has announced its results for the 52 weeks to 1 March 2014.

The following excerpts are from the Home Retail Group year-end report, available to view, in full, on our Industry Articles pages: http://www.insightdiy.co.uk/articles.asp

In October 2012 Argos outlined a five-year Transformation plan to reinvent itself as a digital retail leader; transforming from a catalogue-led business to a digitally-led business. The plan is designed to address the competitive challenges, exploit the market opportunities and restore sustainable growth.

There are four key elements to the Transformation plan:
1. Reposition Argos’ channels for a digital future;
2. Provide more product choice, available to customers faster;
3. Develop a customer offer that has universal appeal; and
4. Operate a lean and flexible cost base.

In what remained a challenging market environment in FY14, Argos made good progress against its key Transformation milestones and delivered a solid trading performance throughout the year.

Argos Financial Review:
Total sales in the 52 weeks to 1 March 2014 increased by 3.0% to £4,051m. Net space sales change reduced sales by 0.3% with the store portfolio reducing by a net 3 stores, to 734. Like-for-like sales increased by 3.3%. Electrical products continued to deliver sales growth driven by growth in tablets, TVs and white goods, which together with strong sales of video game systems following the launch of new consoles, more than offset small declines in furniture, homewares and jewellery.

The gross margin rate was down by approximately 50 basis points. The negative drivers were an adverse sales mix impact, resulting from the growth in sales of margin dilutive electrical products, combined with a reduction from the net impact of the adverse movement in US$ exchange rate and sea freight costs. These reductions were partially offset by an improvement from a reduced level of stock clearance activity.

Total operating and distribution costs increased by £5m as a result of increased sales, underlying cost inflation and cost investment in strategic initiatives partially offset by further cost saving initiatives. Benchmark operating profit increased by £12.0m, or 12%, to £112.3m (FY13: £100.3m).

Operational review:
Internet-led sales grew to represent 44% of total Argos sales in FY14 aided by a strong performance from both mobile phones and tablets, which grew by 89% and now represent 18% of total Argos sales. Check & Reserve also continued to grow and represented 32% of total Argos sales, with the remaining 12% of internet-led sales being fulfilled through home delivery.

Source : Home Retail Group
www.homeretailgroup.com