Home Retail, the biggest household goods retailer in Britain, warned on its profit outlook yesterday, blaming uncertainty ahead of the Christmas trading period and increased investment at its Argos chain.
Shares in the firm, which also runs the DIY chain Homebase, fell up to 16% after it forecast profit for its 2015 to 2016 year would be slightly below the bottom end of the current range of analysts’ forecasts.
Analysts had expected an underlying pretax profit of £115m to £140m (€156.8m to €190.8m), compared with £132m in the previous year.
Haitong analyst Tony Shiret said the forecast was worse than his own downbeat expectations.
“We would expect that management has some better visibility on likely pricing/promotional levels at Argos and does not like what it sees,” he said.
CEO John Walden said trading at Argos for the Christmas season was less predictable than usual as both retailers and shoppers weigh whether to repeat last year’s trend of embracing the Black Friday discount shopping day, which this year falls on November 27.
British retailers have traditionally tried to sell at top prices in the run-up to Christmas before launching sales on December 26.
This uncertainty, increased investment inArgos, plus lower sales of TVs, tablets, and white goods all contributed to the warning.
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