TV sales slump hits Argos

Waning demand in Britain for TVs and computers drove a second straight quarterly sales decline at Home Retail’s Argos, but the chain said it was still winning market share and forecast an improved performance in its second half.

Home Retail, which also runs do-it-yourself chain Homebase, is transforming its larger, more profitable Argos arm from a catalogue-based retailer into a digital-oriented business, targeting higher sales from mobiles and tablet PCs and making collections faster and easier.

Sales at Argos stores open for over a year fell almost 4% in the 13 weeks to May 30, against analysts’ average forecast of down 3.7% and a 5% fall in the final eight weeks of its 2014-15 year.

Home Retail had cautioned in April that Argos’s first-half sales would likely decline as it works through revamps to the business and battles weaker demand.

Shares in Home Retail have fallen by about 20% over the last year.

Home Retail finance director Richard Ashton told reporters the drop in TV sales reflected last year’s strong numbers, which included the beneficial impact of the soccer World Cup, and an overall decline in the TV market, down up to 35% in some categories.

He said that tablets and computers both experienced reductions in sales values due to reductions in selling prices, though the volume of tablets sold had increased.

But Argos’s sales look weak compared with rival Dixons Carphone, which last week posted a 13% jump in quarterly sales.

Home Retail chief executive John Walden attributed Dixons’ relative outperformance to its much bigger presence in mobile phones. “Mobiles is a big deal, especially with new product launches. Those are not products that we sell,” he said.

“We’re actually pretty pleased relative to the market because in most ... categories we’ve either gained or held share.”

Walden predicted a stronger second-half as Argos implements its transformation plan, introducing more new-format stores.

Like-for-like sales at Homebase rose 5.4% against analysts’ average forecast of a 0.8% fall.

Some analysts see Home Retail’s customer base as vulnerable to renewed austerity measures from Britain’s new Conservative government, in which context next month’s planned budget could be important in shaping consumer spending.