Shares in the company slumped as sales missed market forecasts, raising doubts about the group’s turnaround plan which is aimed at strengthening its performance against supermarkets and online rivals.
Sales at Argos stores open for more than a year grew 1.9 per cent in the 13 weeks to 1 June to £828 million, below a forecast of 3 per cent. In the previous eight-week trading period sales at Argos had grown 5.2 per cent.
The company said the cold weather had hit seasonal sales of outdoor toys, barbecues, garden furniture and lawn mowers, both at Argos and at its home improvement chain Homebase. The latter grew sales by 0.2 per cent to £422m. “Seasonal categories have been a lot weaker than we expected them to be, not surprisingly given the poor start to the seasonal trading period,” chief executive Terry Duddy said.
There was stronger demand for tablet computers and TVs at Argos but the higher sales of less profitable electronics hit Argos’s gross margin – which was down by about 0.75 per cent of a point.
Investec analyst Bethany Hocking reduced the target price for the shares from 173p to 159p but retained her “buy” recommention based on the potential turnaround of Argos. Shares in Home Retail, which have more than doubled over the last year, closed down 13p at 131.1p.