Competition slows Argos-owner's sales

Catalogue retailing group GUS today reported a sharp slowdown in growth over Christmas as competition intensified and UK retail demand waned.

Like-for-like sales at Argos - of which there are 18 stores in Ireland and more than 500 in Britain - rose just 1% in the 15 weeks to January 8 – down from 7% in the first half of its financial year.

GUS reported difficult markets for jewellery and toys, which contribute twice as many sales in the Christmas period compared with the rest of the year.

But strong performances from consumer electronics, white goods, mobile phones, leisure and photography products ensured underlying sales continued to grow.

Price cuts and promotional activity were used in the run-up to Christmas to enable Argos to outperform its market, with total sales rising 6% in the 15 weeks to January 8.

GUS assured investors that enough savings had been wrung from the supply chain to ensure that margins stayed ahead of a year ago, while currency swings also helped.

In an update on third-quarter trading, GUS said each of its key businesses had delivered a positive result.

DIY chain Homebase overcame a slowing market to improve like-for-like sales by 4%, with good performances from kitchens and bathrooms and new ranges in paint, tiling and lighting.

The figures were also flattered by the timing of a special “10% off” discount day, which fell in the third quarter this year but featured later a year ago.

Credit checking arm Experian achieved a record quarter for growth, with an “exceptional” increase in sales of 30% in North America after stripping out the impact of currency swings.

Corporate acquisitions – most of which were completed in the second half of the previous financial year – accounted for 13% of this growth, GUS said.

Experian’s sales in the rest of the world were 18% ahead of a year ago at constant exchange rates and also received a boost from takeovers, particularly the acquisition in October of address management software firm QAS.

Chief executive John Peace said: “Against this background, we remain comfortable with expectations for the group for the full year.”