Home Retail slumps as Argos problems mount

Home Retail Group’s boss hit back at claims that Argos was at risk of becoming the next Comet, the collapsed electronics chain, after a profit warning sent shares crashing yesterday. Two looming events on the retail calendar – Black Friday sales and the crucial Christmas period – have served to make the usual festive period “less predictable than usual”, Mr Walden said.

A combination of this trading uncertainty, an increased investment in the launch of new home delivery and store collection propositions at Argos, plus weaker first half profit at the division, meant the group expects full-year underlying pretax profit to be slightly below the bottom end of the current range.

Though total sales fell 2 percent to 2.6 billion pounds, the firm expects an improved sales performance in the second half.

Interim results from Home Retail group show a solid performance from Homebase, a mixed outcome from Argos leading to an overall increase of 10% in benchmark profit to £34.1m.

Home Retail hopes for a pick-up in sales at Argos over the second half, but cautioned the “challenging” trading, costs of its Fast Track delivery service and an unpredictable Christmas were likely to see annual profits fall “slightly” short of City expectations.

Last year Argos missed sales forecasts for the holiday season after a Black Friday shopping frenzy was followed by a sharp drop off in demand in the following weeks. Walden said the outcome of this year’s Black Friday was just as hard to predict: “Retailers who believe the pattern for black friday is certain are just guessing”.