Home Retail calls for consumer tax relief as Argos profits plunge 94%

SHARES in Home Retail Group, the owner of Argos and Homebase, tumbled as it revealed that profits had fallen drastically, prompting its chief executive to issue a plea to the Chancellor to support lower to middle income earners with tax breaks.

Analysts said the group delivered a “much weaker performance than feared” in its latest interim results, as catalogue retailer Argos in particular barely scraped an operating profit of £3.4 million, down 94 per cent on last year after cash-strapped consumers put off buying “big ticket” electronics items.

Terry Duddy, chief executive, said UK consumers needed direct aid and called on George Osborne to provide tax relief at lower income levels.

He said: “For this business, and I think in general, it would be a good thing to be able to give people more pounds in their pocket who are in that lower income or lower middle income bracket.”

He added the company had not seen the sales improvement it had expected as it gears up for the Christmas season.

The firm hopes to offset some of the turmoil in the UK, where it has 750 stores, by setting up a £45m joint venture with Chinese manufacturing giant Haier to launch Argos in China. Home Retail Group’s bottom-line pre-tax profits slumped 70 per cent to £28m, as its homewares chain Homebase was also hit by a squeeze on its sales and margins. Sales in the 26 weeks to 27 August fell 6 per cent to £2.6m on the same period last year

Home Retail shares, which prior to yesterday’s update had already lost 45 per cent of their value over the last year, were down 16.9 per cent at 99.5p