Argos to move in with Homebase at 20 locations

Home Retail Group is placing 20 Argos stores inside its Homebase outlets as part of a trial format.

The retail giant announced a raft of ideas, including the introduction of smaller convenience stores on the High Street, while posting a strong set of full-year results.

Pre-tax profit fell to £71.2million for the 52 weeks to March 1 from £120.9million, but this was largely due to the cost of introducing new store formats and a one-off gain from pension changes the previous year.

However, new chief executive John Walden said underlying pre-tax profit increased 27 per cent to £115.4million, ahead of the £112million analysts were expecting.

Total sales grew to £5.6billion from £5.4billion but the shares fell 2p to 204p despite a 10 per cent hike in the full-year dividend to 3.3p a share.

Walden said: ‘Although there are signs that economic conditions are beginning to improve, with recent reports of reductions in inflation, increases in employment and growing levels of consumer confidence, we see some things happening only regionally, and overall it’s hard to read.’

Walden will increase capital expenditure to £200million from £175million to fund the new store ideas.

A new digital format, which was introduced in East London’s Old Street store, is being extended and there are to be two new store concepts.

The Argos store-within-a-store will be accompanied by a number of mini-Argos shops on the High Street that will be just 3,000sq ft compared to a typical 15,000sq ft outlet.

They will be supplied several times a day from larger stores in a ‘hub and spoke’ system.

The idea is that customers can place an order which will be delivered to the store later that day, in a bid to beat rival Amazon which is unable to do same-day delivery.

Walden will also allow third-party firms, such as eBay, to use its network of more than 700 stores for customer collections.

Over the year, tablet computers and video games exceeded sales of its cheap jewellery, while sales at Homebase were up 4.1 per cent to £1.5billion, benefiting from store revamps.

Walden is conducting a review of the entire group but said a sell off of Homebase was ‘not part of the current plan’.

Source : ThisIsMoney.co.uk
www.thisismoney.co.uk/money/markets/article-2617226/Homebase-trials-20-Argos-stores-inside-outlets.html