Comment: Digital direction switch too slow?

Martin Flanagan
Martin Flanagan
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THOSE impressed by the remarkably robust 13 per cent like-for-like sales jump at electricals retailer Dixons Carphone recently will have been brought down to earth with the more pedestrian figures yesterday from Argos-owning Home Retail Group. Argos, which has a strong electronic offerings, saw same-floorspace sales fall just under 4 per cent in its latest trading quarter, as a rise in sales of mobile phones failed to compensate for the slide in electrical goods.

So what gives? A good big ’un will beat a good small ’un, basically. The giant created by the merger of Dixons and Carphone has a far greater array and depth of gadgetry and services than Argos can aspire to.

The City partly anticipated yesterday’s bad news from Argos because Home Retail revealed in March that like-for-like sales fell 5 per cent in the eight weeks to the end of February.

Home Retail chief executive John Walden is also not signalling a quick end to the difficult trading at the subsidiary, saying sales will remain challenging in the first trading half before recovering in the second.

There is some good news for Home Retail. Same-store sales at its Homebase DIY chain rose 5.4 per cent in the latest quarter, showing that at least that business has continued to make hay while the sun shines.

Argos is also a couple of years into a five-year restructuring which is introducing newly-designed shops and iPads for ordering products instead of catalogues, for which Walden has high hopes.

However, there still remain sceptics out there. Some still question whether Argos’s initiatives will improve profits beyond the natural uplift from a current improving economic outlook.

Argos is going digital. But the jury still remains out.

Signals are mixed

IF NETWORK Rail (NR) was a signal box, you would not currently want to be on the train. The group, beset by the threat of national rail strikes and criticised for causing passenger chaos during engineering works, has seen its profits more than halve to £506 million in its latest trading year from £1.35 billion in 2013-14.

Meanwhile, debts have jumped to £37.76bn from just under £33bn. And, as things look worse financially, it does not seem to many passengers and train operating companies to be getting any better on the operational side.

Network Rail has been lambasted by rail regulators for poor punctuality and reliability, with routes like Southern, Thameslink and Scotland singled out.

The Office of Road and Rail says NR’s overall trains-on-time figure was 89.6 per cent – nearly 3 per cent lower than its target of 92.5 per cent.

It is hardly a glowing performance for the not-for-dividends company that took over the running of Britain’s rails, signalling and the vast majority of the stations when Railtrack shuffled off its bankrupt coil in 2002.

To be fair to NR, it is throwing money at the problems as the numbers of passengers using Britain’s rail system soar. Spending on the network is double five years ago, and includes £2.9bn a year on replacing track and infrastructure.

This sociological phenomenon of far greater use of the train network is unlikely to change in the foreseeable future so it is difficult to see an easy way out of the challenges the organisation faces.

It is a hard slog. In many ways, the business appears to be running fast to stand still.