Strong start to year for Argos owner

Continued strong demand for flat panel televisions ensured Argos owner Home Retail Group reported a strong start to its financial year today.

The company said total sales at the catalogue chain grew by 4.5% to £893m (€1.3bn) in the 13 weeks to June 2.

Much of the improvement came from additional trading space, but Home Retail also pointed out it achieved a like-for-like sales rise of 0.9% against a highly successful period a year earlier.

Profit margins were also higher, although the company said investment in lower prices would lessen the figure over the course of the year.

The improvement in Argos like-for-like sales reflected demand for flat panel TVs and video game systems, while weaker categories included audio, DVD and landline phones.

Total internet orders grew by 29% and represented 18% of total sales, around half of which were reserved for in-store collection.

Home Retail's other division, Homebase, saw total sales increase by 5.2% to £463m (€686m) in the quarter. The contribution from new store space was 2.5%, while like-for-like growth was 2.7%.

Warm weather drove sales in March and April, but trading then became more difficult as the division's performance "reversed significantly" in May.

Overall, chief executive Terry Duddy said Home Retail had made a strong start to the financial year "in a highly competitive market".

He added: "We remain cautious given the uncertain consumer outlook and our expectations for the full year are unchanged at this early stage."

The group saw profits in the last financial year rise 12% to £376.7m (€558.1m). Home Retail has almost 1,000 stores but said in May it saw the opportunity for an Argos estate of more than 800 sites with Homebase operating from more than 450 stores.

It plans to open approximately 30 Argos stores a year, from its start-of-the year base of 680 outlets, while adding 15 Homebases a year from the total in May of 310.