Home Retail Group boss warns on unpredictable Christmas season

Disappointing half-year results from Argos combined with uncertain Christmas trading has led parent company, Home Retail Group, to issue a profit warning for its full-year results.

The group's total half year profit before tax increased slightly by 10% to £3.2 million, while Homebase profits increased by £6.5 million and Argos profits decreased by £5.6 million. Meanwhile, total sales were down 2% to £2.6 million.

Argos had a rough half year to 29 August 2015, as like-for-like sales dipped 3.4%, which Walden put down to a decline in electrical and seasonal product sales. Meanwhile, Argos costs increased by £14 million.

Walden said he looks forward to improved Argos sales during the retailer's second half, but he remains concerned about Christmas trading.

"Trading at Argos during this year’s important Christmas season seems less predictable than usual, as both retailers and customers determine whether to repeat last year’s unusual Black Friday patterns," explained Walden.

He said the combination of trading uncertainty, an increased investment in Argos' Fast Track launch and poor profits from the retailer's first half has caused Home Retail Group to lower its full-year profit expectations to £115 million to £140 million.

Argos digital transformation

Meanwhile, Argos made progress on its digital transformation plan as it completed the testing of new digital technologies including Fast Track Collection and Fast Track Delivery. It also opened 86 digital concessions bringing its total of digital stores up to 148.

Walden added: "Argos continued to make good progress with its Transformation Plan, delivering strongly against its digital store opening programme. Argos also substantially completed the technology and operational steps necessary to launch ‘Fast Track’ – its new home delivery and store collection propositions. Argos is investing significantly in the launch of Fast Track and although the rate of customer take-up cannot be certain, we are confident that customers will increasingly embrace this market leading service over time."

Nearly half (45%) of total Argos sales now come from online, while mobile sales increased by 13% to represent 25% of total sales. Homebase, on the other hand, increased its digital sales by 43% bringing total online sales to 10%.