Irish arm of Argos posts €154m annual pre-tax loss

The Irish branch of UK retailer Argos last year recorded a pre-tax loss of €153.8m as a result of an exceptional cost.

The loss arose from the firm booking a €153m impairment of its entire goodwill as a result of a review of the business in the light of the recommended offer by Sainsburys for the purchase of the owner of Argos, the Home Retail Group.

Before the exceptional cost is taken into account, Argos Distributors (Ireland) Ltd’s losses last year reduced sharply going from €2.56m to €173,000.

In newly filed accounts for the company, its directors state that the decreased losses relate to a decline in net operating expenses and an increase in sales.

Revenues at the firm increased by 2% going from €223m to €227.5m in the 12 months to the end of February last.

Argos has been traditionally a catalogue retailer but also allows its customers buy online but, in common with other ‘bricks and mortar’ retailers, is coming under increasing competitive pressure from exclusively online retailers.

Argos has 40 stores in Ireland and the average revenue per store last year worked out at €5.67m.

The numbers employed by the business, here, last year reduced from 1,248 to 1,114 with staff costs decreasing from €19.9m to €18.5m.

The loss last year reduced the company’s accumulated profits from €162m to €8.3m.

At the end of February last, the firm’s shareholder funds stood at €232.43m — down from €391m one year earlier.

The firm’s net operating expenses last year decreased from €63.3m to €56.4m made up of selling costs decreasing from €46.15m to €41.63m and administrative expenses decreasing from €17.1m to €14.7m.

The filings show the losses take account of net interest payable charges of €456,000 compared to a net interest receivable of €2.39m in fiscal 2015.

The firm’s cash reduced from €26.6m to €18.9m. The figures also show that the Argos Ireland’s spend on operating leases decreased marginally from €11.8m to €11.7m in its last financial year.

The directors did not recommend the payment of a dividend last year following a dividend of €13,000 in the prior year.

Sainsbury’s CEO Mike Coupe said in November he was “more confident than ever” in the retailer’s £1.4bn (€1.6bn) takeover of Argos despite falling profits.

The UK supermarket company got approval to buy Home Retail Group last summer and concluded the deal in the autumn.