Q1 like-for-like sales flat at Argos

Home Retail Group, the UK’s leading home and general merchandise retailer, today publishes a trading statement covering the 13 weeks from 28 February to 28 May 2016.

Excerpts from the press releases follow. To view the full publication, please click here.

Total sales at Argos grew by 2.6% to £868m.  Net new space contributed 2.5%, mainly as a result of store openings in the previous financial year.  There were two closures of digital concessions within Homebase stores in the quarter, reducing the store estate to 843.  Like-for-like sales increased by 0.1% in the quarter, however the cannibalisation impact from the new space added in the previous financial year was around 1% and therefore Argos’ underlying like-for-like sales increased by approximately 1%.

Sales grew in both electrical and non-electrical product categories during the quarter, with the growth in electricals principally attributable to the performance of TVs, mobiles, computers and tablets, partially offset by a sales decline in white goods.  The growth in sales of non-electrical products was largely driven by furniture and general sports, partially offset by weaker sales of seasonal products.

Internet sales grew by 16% in the quarter and represented 49% of total Argos sales, up from 44% for the same quarter last year.  Within this, mobile commerce sales grew by 17% to represent 29% of total Argos sales, up from 25% in the same quarter last year.

The approximate 100 basis point gross margin decline was principally driven by the anticipated impact of adverse currency and shipping costs and an adverse sales mix impact mainly attributable to the improved performance of margin dilutive electrical products.

John Walden, Chief Executive of Home Retail Group, commented:

"I am pleased with our performance in the first quarter. Argos delivered good total sales growth together with positive like-for-like growth, representing its strongest sales growth performance in eight quarters. This was achieved against the challenging backdrop of constrained seasonal product sales due to poor weather, on top of a deflationary pricing environment.

"Many of the digital capabilities we are building, as we pursue the Transformation Plan to reinvent Argos as a digital retail leader, are positively impacting our business. Internet sales grew 16% during the quarter, which is our strongest quarterly digital sales growth for over three years. Digital sales accounted for almost 50% of total Argos sales in the quarter, including mobile commerce which now represents almost 30% of sales. Argos’ customer experiences overall improved in the quarter, aided by Fast Track, a market-leading national proposition for both same-day home delivery and store collection. Fast Track continues to build momentum and is achieving leading levels of customer satisfaction.

"Finally, we remain on track to complete the proposed transaction with Sainsbury's in the third quarter of this calendar year. Given the natural distraction that a transaction such as this can be for our colleagues, on top of the recent sale of Homebase, I am particularly pleased with our performance in the quarter."

Source : Home Retail Group Press Release
www.homeretailgroup.com

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