Store cards blunder over excess fees to cost Argos £30m

An Argos store in London. Picture: John Stillwell/PA Wire

An Argos store in London. Picture: John Stillwell/PA Wire

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The strongest sales performance in two years at household goods retailer Argos was overshadowed by news it will have to fork out £30 million in compensation for overcharging store card customers.

Argos parent company Home Retail Group (HRG), which has agreed to a takeover by supermarket chain Sainsbury’s, said its financial services division recently identified excess fees collected from card holders making late payments.

Individual amounts to be refunded will amount to “maximum double-digit pounds” for a total provision of up to £30m.

HRG chief executive John Walden said it was not a “material matter” for the business but that it detracted from the best trading posted by Argos during the past eight quarters.

Strong demand for high-end TVs, computers and tablets saw Argos’s total sales rise 2.6 per cent to £868m in the 13 weeks to 28 May, while same-store sales lifted 0.1 per cent, HRG said.

Internet sales at Argos, which specialises in catalogue and online selling, rose 16 per cent, the strongest growth in more than three years, accounting for almost half of total revenues,

Walden said demand for TVs had been driven by the new 4k technology, and also boosted by the UEFA Euro 2016 football tournament getting underway tomorrow.

Sales of computers and tablets both rose 7 per cent, helping offset a decline in white goods and weaker sales of seasonal products during the chilly spring weather.

HRG said its £1.4bn takeover by Sainsbury’s was on track to complete in in the autumn. The deal is being examined by the Competition and Markets Authority.

“Given the natural distraction that a transaction such as this can be for our colleagues...I am particularly pleased with our performance in the quarter,” Walden said.

The error affects less than 10 per cent of Argos card customers. The mistake was only discovered during the last few days, and the company has yet to write to those affected.

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