Argos Report Growing Pinch On Consumer Spending

The owner of the retail chain Argos has today announced that it is starting to feel the effects of the credit crunch and wider economic pressures on its sales, with consumer spending throughout its stores down on previous years reports according to its latest profit figures.

The Home Retail Group, which also owns Homebase, has today reported that its sales targets would be difficult to meet given the current market climate, which it forecast would be likely to continue to cause problems throughout 2008 as consumers across its stores feel the pinch from underlying economic difficulties.

Sales at Argos stores were down by 0.2% up to the first week in January, reflecting a real slowdown in sales compared to last festive period. Homebase also suffered significantly over the same period, with a decline of over 6% in its like for like sales over the last quarter.

Accounting for the downturn, the group has said that consumers are now begin to feel the pressures from successive interest rate rises and the lack of availability of credit following the collapse of the sub-prime sector in the US, which sent banks and business across the globe into panic and dried up traditional lending channels for businesses and consumers alike.

Despite the slowdown in sales overall, the firm did report positive results in its technology sales, with mobile phones and games consoles selling beyond expectations over the period. However the strong performance in these market segments was insufficient to offset the wider slowdown, which ultimately had the major bearing on the outcome over the 18 week period.

It remains to be seen whether the coming months will continue to prove problematic for HRG as it has initially forecast, and whether or not it can improve performance in spite of the current awkward market conditions.

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