Argos plans ‘digital catalogue’ and wi-fi in-store

Argos is closing a number of shops but aims to retain around 700 sites on high streets across the UK. Picture: TSPL

Parent company Home Retail Group also said it plans to launch an in-store “digital catalogue” before Christmas as it seeks to move away from its traditional print version, along with a “fast-track” collection service for customers who order goods over the internet.

A push for more online business helped Argos deliver a 6 per cent increase in underlying profits to £100.3 million, in sharp contrast to the previous year’s 57 per cent plunge.

Online and mobile sales accounted for 51 per cent of the total £3.9 billion revenues at the chain, which has 737 stores across the UK.

Retail analysts at N+1 Singer said the group’s self-help measures “cannot be ignored”, but Argos was also being boosted by short-term factors such as the collapse of rival Comet and the recent surge in the tablet market.

They added: “We remain cautious on the longer term outlook for the business, believing that management’s targets feel too optimistic.”

Home Retail chief executive Terry Duddy said: “Tablets were a strong driver of growth in the financial year, with Argos adding to its range of products to ensure a strong position in this competitive market. New devices from Apple, Samsung, Asus and Google have all been added to the range in the last year.”

The group unveiled a digital makeover at the business in October that will lead to a reduced circulation of the print version of the catalogue – launched in 1973 – and at least 75 stores closed or relocated over the next five years.

It aims to maintain a network of around 700 branches, but 11 stores were closed in the last financial year and a further ten are due to shut over the coming year.

Despite the strong performance at Argos, the wider group saw overall underlying pre-tax profits drop 10 per cent to £91m, broadly in line with analysts’ expectations, after a tougher year at Homebase.

The DIY chain suffered a 52 per cent slide in earnings to £11m as demand for seasonal items was hit by the bad weather during the first half of the year.

Analysts at Cantor Fitzgerald maintained their profit forecast for the current year at £100m. The broker said: “We still believe it will be a challenge for the company to improve earnings even with a cyclical upturn.”

However, chairman John Coombe said the retailer was confident that it has “the appropriate plans in place” for the future, pointing to its net cash position of £396m.

He added: “The group delivered a solid sales performance and very strong cash generation despite subdued consumer spending.”

The board recommended a final dividend of 2p a share, taking the total payout for the year to 3p, down from 4.7p a year ago.

Home Retail said: “As the group’s earnings profile is heavily weighted to the seasonal Christmas trading at Argos and hence the second half of the group’s financial year, it is the board’s intention to hold the interim dividend for the year ending 1 March 2014 at 1p.”