The catalogue chain scraped a profit of £3.4 million (€3.9m) in the 26 weeks to August 27, down from £54.4m a year ago, as sales of big ticket items and electrical items stalled.
Shares slumped 14% as the group admitted there had been no let-up in the grim consumer mood in recent weeks as it approaches the key Christmas trading period.
News that Argos will offset some of the turmoil in Britain by opening in booming China next year failed to ease investors’ nerves. The dire performance at Argos pushed the group’s bottom-line profits down 70% to £28m, although its homewares chain Homebase also suffered a squeeze in sales and margins.
Like-for-like sales at Argos fell 9%. It said its core customers bore the brunt of the squeeze in living standards, adding that with many not being home owners they had not benefited from low interest rates.
Argos’s operating margin was squeezed to 0.2% from 3% as it was forced to discount to shift stock and as it battled higher shipping costs and the weakness of the pound.
Mr Duddy added: “Core customers at Argos have continued to be under greater pressure and there were ongoing challenging conditions across several product categories, most notably consumer electronics.
Like-for-like sales at Homebase, which operates 342 stores, were down 0.6%, as sales of big ticket items remained challenging, although sales of bedroom furniture and bathrooms benefited from new ranges and installation services.