11% fall in Argos pre-tax profits

PRE-TAX profits at the Irish arm of catalogue retailer Argos last year fell 11% to €20.4 million despite a rise in revenues.

Accounts just filed by Argos Distributors (Ireland) Ltd show the company sustained the drop in profits after revenues climbed from €205.2m to €213.8m in the 12 months to the end of February 26.

The British-owned company operates 39 stores across Ireland and according to the directors’ report, “sales were up 4% on the previous year, despite the current retail downturn in the Irish economy”.

“The increase in sales, however, has been to the detriment of gross profit which has fallen to €74.1m during the year.

“Operating costs have reduced marginally as a result of the ongoing cost initiatives throughout the year.”

The directors state the impact of these moves has led to an operating profit of €13.5m — almost half the operating profit of €25.9m in 2009.

Gross profit fell from €86.7m to €74m.

The company last year benefited from €7m in finance income compared to finance expenses totalling €2.75m in 2009.

This led to the smaller drop in pre-tax profits from €23.2m to €20.4m.

The pre-tax profit takes account of €2.96m in non-cash depreciation costs.

The directors’ report states that the company “made further operational improvements by increasing the product range available at each individual store and improving the systems, processes and layouts to enhance customer choice, service and convenience”.

At the end of February, the company had accumulated profits totalling €149m. Its total equity amounted to €375.2m and this included €207m in cash.

The figures show that the average number employed by the company last year grew by 69 from 1,274 to 1,343, with staff costs declining from €22.1m to €21.4m The accounts show that the company’s cost of sales increased by €21.3m from €118 million to €139.8million, while its net operating expenses fell marginally from €60.7m to €60.5m.

The directors did not recommend the payment of a dividend last year.

Part of Home Retail plc, Argos has 700 stores across the Britain and Ireland, employing 33,000.