Argos experiences worst sales since1970s

Home Retail Group, owner of Argos and Homebase, has posted a half-year loss of £437 million.

For the half-year to 30 August, Home Retail Group posted a £437 million pre-tax loss, after exceptional items, compared with a £169.3 million profit for the same period in 2007.

Home Retail Group said its Argos chain was experiencing the worst sales since it was established in 1973 as consumers continue to cutback on their spending as the UK enters a recession.

Terry Duddy, Home Retail Group’s chief executive, said we have seen like-for-likes in negative territory in Argos that we have not experienced before, adding that the worst weeks were mid-September, when the Lloyds TSB and HBOS deal was announced amid the collapse of US investment bank, Lehman Brothers.

Mr Duddy said the group was expecting negative sales over Christmas, was managing stock tightly and will reduce the number of temporary staff it takes on in the final quarter by 5,000.

Home Retail Group plans to cut back on capital expenditure in the current financial year to less than £175 million from £225 million, primarily due to fewer store openings at Homebase.

It will reduce number of Homebase stores it will open to between five and 10 from a planned 10 to 15, while Argos will be reduced by from about 30 to 25.

The news comes as department store, John Lewis, announced a further fall in weekly sales as consumer confidence continues to be dented due to the financial crisis.

The retailer, which is seen as a barometer of the retail industry, reported that sales across its department stores and Waitrose supermarkets fell by 2.2% in the week to October 11.

Furthermore, Debenhams announced a 16% fall in profits and slashed its final dividend.

According to Nick Bubb of Pali International, anxiety is growing for the retail sector and if things don’t improve next week during half-term, retailers will be staring disaster in the face.

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