In direct contrast to recent years, the first quarter of 2013 yielded positive results for the high street. This theme has continued with positive annual results from Home Retail, owners of one of the high street’s key brands.
For the first time in five years underlying sales at Argos have risen, ushering in a more positive future for the struggling retailer. Like for like sales excluding the impact of new store openings rose by 2.1 per cent during the twelve months to March 2nd, equalling a total sales figure of £3.93 billion.
Sales growth was particularly strong in areas such as consumer electrics and white goods, largely thanks to the rise in popularity of tablet computers. Industry experts have theorized that the administration and ultimate demise of rival electrical brand Comet significantly contributed to Argos’ success in these categories, especially in the first quarter of 2013 and over the Christmas trading period.
Changes to the business and its commercial properties have also stood the retail in good stead, with the revamped website managing to increase sales and attract new customers to the business. The “check and reserve” function has proven incredibly popular with consumers working to a tight schedule and those who wish to bridge the gap between traditional retail and online shopping.
Sales through the website and check and reserve channels now make up more than 50 per cent of overall sales for the firm when combined.
Home Retail chief executive, Terry Duddy, remains cautious about the future of British retailing but confirmed that these results will allow for a continuing revamp of the Argos brand.
He said; “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 view of the 2013/14 financial year is that it will remain similar to 2012/13 with consumer spending continuing to be impacted by ongoing inflationary pressures and low levels of consumer confidence.
“However, the group’s strong financial position enables us to deliver on the transformation plan to reinvent Argos as a digital leader.”
In order to realise this ambition to make Argos a “digital leader”, Home Retail will invest £300 million into the company which will dramatically alter the format of Argos commercial properties. The traditional catalogues will be replaced by touch-screen computers to modernise the feel of the business, while more exclusive products will be offered to entice consumers away from competitors.
Furthermore, the programme of unprofitable store closures will continue in order to financially streamline the business. Around 75 closures are expected throughout the three year period, although this is largely due to Argos not wishing to renew leases upon their expiration date.
Research director at Conlumio, Matt Piner, praised Argos for its adaptability to new retail trends.
He said; “Argos has benefited from rivals Tesco and Asda switching interest back to their core food businesses – nevertheless, Argos also deserves credit for ensuring it has been well placed to capitalise on these displaced shoppers.
“The last twelve months have seen consumers really embrace shopping across different ‘channels’.”
Previous Post
China Set to Become Investment Hot Spot
