Early progress on the make-over of catalogue chain Argos as a digital-led retailer helped it more than double half-year profits, it was revealed yesterday.
Argos’s performance and the best half-year sales figures for at least 11 years from DIY chain Homebase meant their owner – Home Retail Group – returned to underlying profit growth.
Terry Duddy, who is to stand down as Home Retail boss by July after 15 years at the helm, said the group was in “excellent shape” in the run-up to the key Christmas trading period.
Argos’s underlying operating profits leapt to £7.7 million in the six months to 31 August, up from £3.3m a year earlier thanks to on-going strong demand for tablet computers.
The high street chain recently followed Tesco in announcing the launch of its own-brand tablet, called MyTablet, which will be on sale for less than £100 as part of its Christmas range.
Home Retail said the Argos digital transformation was on track, with total internet sales now accounting for 43 per cent of all Argos revenues, while smartphones and tablets represent 16 per cent of turnover after investing in apps for Android and Apple.
The group plans to scale back its print version of the catalogue as it introduces more digital versions, while it is also closing or relocating at least 75 stores over the next five years.
It insisted the store estate will remain at the heart of its business, with around 90 per cent of all sales still involving a shop.
It hopes to reinvigorate the high street shops, with plans for a new concept store that will see hard-copy laminated catalogues axed in favour of tablets for customers to browse on.
Overall underlying group-wide pre-tax profits rose 53 per cent in £27.4m in a sharp reversal of recent falls as the Homebase chain also delivered a robust first-half performance.
A surge in demand for garden furniture in the heatwave helped Homebase’s like-for-like sales rise 5.9 per cent, marking the strongest growth since it was bought by Home Retail in 2002. Underlying profits at the DIY retailer rose 11 per cent to £27.2m.
Duddy predicted it would be a “tech Christmas” for its Argos business this year, with tablets and games set to be in demand.
But he cautioned that, despite the revival in trading across both the group’s chains, consumer spending would remain “subdued” as the wider economic recovery has yet to help under-pressure family incomes.
James McGregor, director of the retail consultants Retail Remedy, said Home Retail had delivered a “gargantuan” first half. He added the increase in mobile sales at Argos showed the channel is “here to stay, and will be massive”.