Argos owner Home Retail to up redress

Argos owner Home Retail said yesterday it may need to increase a provision by up to £30m (€38m) to compensate financial services customers who were overcharged, taking the shine off its best quarterly trading report for two years.

The retailer, which in April agreed to be taken over by supermarket operator Sainsbury’s, said its financial services division had identified it erroneously collected excess fees in relation to the late payment of amounts due from some customers. It booked a small charge in its 2015-16 results, published in April, but now believes a more extensive customer redress programme is needed, necessitating a possible increase in the provision by around £30m.

“In the ordinary course of us checking our procedures we discovered there was a calculation error in the penalty charges for customers who were making late payments, so we were slightly overcharging,” chief executive John Walden said.

“We’re going to correct that for customers affected,” he said, noting the number impacted was less than 10% of its active financial services customer base and the monies involved were a maximum of “double digit pounds” per customer.

Finance Director Richard Ashton said £30m was not a “material” number for Home Retail.

“This is a provision on the balance sheet and our balance sheet runs into billions of pounds so in that context that’s how we describe it as not material.”

Home Retail said catalogue-based retailer Argos’s total sales rose 2.6% to £868m in the 13 weeks to May 28, its first quarter, with sales at stores open over a year up 0.1%.

* Reuters