Ahead of its takeover deal with Sainsbury's, Home Retail Group released sales results for the 13 weeks to May 28 this week, revealing good sales growth for Argos.
Total sales were up 2.6% to £868m at Argos, though the like-for-like increase was only 0.1%. According to bosses at HRG, the "cannibalisation impact from the new space added in the previous financial year was around 1%" meaning that the underlying like-for-like sales increased by more like 1%.
Net new space contributed 2.5% to the sales increase as a result of several store openings. Two digital concessions within Homebase stores closed during the quarter, reducing the the store estate to 843.
Star performers during the quarter were electrical and non-electrical products, with an increase in TVs, mobiles, computers and tables offset by a decline in white goods. Non-electricals were driven by furniture and sports products.
Internet sales grew by 16% and represented 49% of Argos' total sales, up from 44% from the same time last year.
HRG chief executive John Walden said: "I am pleased with our performance in the first quarter. Argos delivered good total sales growth together with positive like-for-like growth, representing its strongest sales growth performance in eight quarters. This was achieved against the challenging backdrop of constrained seasonal product sales due to poor weather, on top of a deflationary pricing environment.
"Many of the digital capabilities we are building, as we pursue the Transformation Plan to reinvent Argos as a digital retail leader, are positively impacting our business. Internet sales grew 16% during the quarter, which is our strongest quarterly digital sales growth for over three years. Digital sales accounted for almost 50% of total Argos sales in the quarter, including mobile commerce which now represents almost 30% of sales. Argos' customer experiences overall improved in the quarter, aided by Fast Track, a market-leading national proposition for both same-day home delivery and store collection. Fast Track continues to build momentum and is achieving leading levels of customer satisfaction.
"Finally, we remain on track to complete the proposed transaction with Sainsbury's in the third quarter of this calendar year. Given the natural distraction that a transaction such as this can be for our colleagues, on top of the recent sale of Homebase, I am particularly pleased with our performance in the quarter."