Profits soar to €16.8m at Argos

ARGOS saw profits soar last year from €5.4 million to €16.8m, while DIY outlet Homebase recorded losses of €36m.

Turnover at Argos fell from €315m to €273m, according to accounts filed for Argos Distributors (Ireland) covering the year to the end of February 2009.

The company employed 1,373 people in the year, down from 1,424 in the previous year. Staff costs were €22.2m, down from €23.4m the previous year.

The company said the initial weakening in domestic demand associated with the major downturn in the housing sector in Ireland resulted in consumers reining back spending as uncertainty dominates.

“This is being accompanied by a severe contraction in the level of discretionary expenditure and a corresponding rise in precautionary saving by consumers,” the accounts said.

In the year Argos had 38 stores in Ireland.

The 13% drop in sales was due “primarily to the current economic climate and resulting retail downturn and this despite the opening of two new stores at Portlaoise and Sligo,” the accounts said.

Operating costs have reduced as a result of cost- saving initiatives introduced in the year. This led to an operating profit of €30.5m, up from €13.4m in the previous year.

The company said it made operational improvements in the year by increasing the product range available in stores, improving the systems, processes and layouts of stockrooms.

The accounts said that consultation with employees or their representatives continued at all levels, with the aim of ensuring their views are taken into account when decisions likely to affect their interests are made.

Meanwhile, the Irish arm of Homebase sustained pre-tax losses of €36m last year after incurring impairment charges totalling €38m.

Homebase House and Garden Centre Ltd recorded the loss to the end of February last after its turnover dropped from €69m to €67m.

The company said that during 2009 consumers reduced their spending due to the economic uncertainty.

In the first half of the financial year the company saw a decline in its like-for -like sales due to a combination of exposure to the seasonal garden-related market which suffered from adverse weather conditions over the spring period and an increasingly volatile trading environment.

“This was followed in the second half of the financial year by very tough trading conditions, with a further decline in like-for -like sales due to the significant deceleration of consumer expenditure across the Irish economy,” it said.

At the end of February 2009 the company had 14 stores. It employed 394 staff at the end of the year, up from 368 in the previous year.