Published on 24 - October - 2012
Argos outlines plan to switch from catalogues to digitalArgos intends to transform itself from a catalogue-led business to a digitally-led business, parent Home Retail Group said today as it revealed its results for the half year to September 1 2012.
Investment in Argos is targeting £4.5bn of sales by 2018
Sales at the group, which also owns Homebase, were down 1% to £2,531m when compared to the same period last year, and cash gross margin fell 2% to £952m. Pre-tax profits rose by 74% to £51m, up 74%, but would have been down 18% without an exceptional £35m gain from the closure of HRG's final salary pension scheme.
Sales at Argos rose from 0.6% to £1,686m, with like-for-like sales also up 0.6%. However, at Homebase, sales were down 6.2% to £787m, with like-for-likes again down by the same amount.
HRG said it had now completed a six-month review of Argos, which revealed a need to invest to restore the business to sustainable growth. Key will be the plan to "reinvent Argos as a digital retail leader and reposition it from a catalogue-led business to a digitally-led business".
This will involve repositioning Argos' channels for a digital future, providing more product choice available to customers faster and operating a leaner and more flexible cost base.
The group said the five-year plan would be underpinned by a three-year investment programme, targeting £4.5bn of sales by 2018.
Meanwhile, some 75 Argos stores will be closed or relocated over the next five years.
At Homebase, internet sales participation has grown by 25% year on year, and now accounts for almost 5% of the retailer's total sales. Within that, Reserve and Collect sales grew 31% to comprise 1.5% of Homebase's total sales while website visits increased by 20% over the same period last year.
The half year saw the launch of a refreshed website, a web platform for mobile devices and the first Homebase Facebook app, allowing the creation of personalised mood boards and enabling customers to 'ask an expert a question'.
HRG said that following the success of its new-style Homebase store in Aylesford the concept is due to launch in the Ruislip outlet at the end of this month. However, the company is also predicting around five stores closures in the current financial year and no new store openings are planned.
Commenting on the results, HRG chief executive Terry Duddy said: "Against a challenging consumer backdrop, Argos has had a solid first half of the year supported by its multi-channel performance, with sales growth driven most notably by an improvement in consumer electronics.
"Homebase delivered a creditable performance in its peak trading period, given the adverse impact of poor weather conditions on its seasonalproduct sales and the difficult market conditions in big ticket categories."
DIYWeek.net does not edit comments which are submitted directly by our users to express their own views. Please report abuse of our comment system here.
© Datateam Business Media Limited 2012. DIY Week.net news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.