Argos reports first sales growth in five years

Argos has reported its first like for like sales growth in five years, driven by its transformation plan to become a “digital retail leader”.

Argos

The retailer’s like for like sales grew 2.1 per cent in the year to 2 March, while total sales grew 1.5 per cent to £3.93bn. Operating profit grew 6 per cent to £100.3m.

Argos’s managing director John Walden, who joined the retailer last year from US electricals chain Best Buy, outlined the company’s five-year digital transformation plan in October 2012.

It has since invested in its IT infrastructure to develop its online, mobile and tablet services in a bid to make them its primary channels for interacting and communicating with consumers. The role of its stores has been shifted to focus on product pick up and customer service for transactions made online.

Multi-channel sales now represent £2bn, or 51 per cent of total sales, up from 47 per cent a year earlier. Mobile accounted for 10 per cent of sales.

Argos said its “Aliens” TV advertising campaign continues to be “well received” by customers, achieving high recall scores in analysis following its Christmas trading period. This month, however, the retailer will cease the operation of its Argos TV home shopping channel concept, which it said was in line with the ambitions of its digital transformation plan.

During the 2013/14 financial year, Argos says it intends to develop a digital catalogue, which will see more innovation with web-based browsers replacing paper catalogues. It is also introducing WiFi across more of its stores and a fast track collection service for goods purchased online or via a mobile device.

In the last financial year there were 11 store closures and two relocations and the company expects to close a further 10 stores in the coming year.

In spite of the strong results reported by Argos, parent company Home Retail Group, which also owns the Homebase chain, reported a 10 per cent drop in underlying pre-tax profit to £91.1m. Sales were “broadly flat” at £5.48bn, as a challenging economic environment and cold weather impacted growth at the DIY chain.

Terry Duddy, Home Retail Group chief executive, says: “This was an encouraging year with both businesses growing their market shares. Argos delivered like-for-like sales growth for the first time in five years and multi-channel sales broke through the 50 per cent threshold. Our strong financial position enables Argos to deliver on its transformation plan to become a digital retail leader, and for Homebase to invest in the rollout of its new proposition.”

Homebase launched several concept stores last year as it looks to position itself as a softer, more stylish, female friendly retailer.

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