Homeware retailer Argos trimmed the fall in its sales in the past quarter but remains under pressure, its owner Home Retail Group said in a trading statement.
Consumers have dramatically scaled back their buying of expensive electrical goods, leaving sales at the catalogue specialist down 8.6 per cent in the three months to the end of August compared with a year ago.
But its £859m revenue was five per cent higher than in the previous quarter, and the sales decline was less steep than the 9.6 per cent fall seen in the earlier period.
Argos’ margins fell 100 basis points in the past three months – worse than the 75bps decline seen in the quarter to May.
Home Retail’s Homebase division also saw sales fall to £382m in the quarter, from £458m in the previous three months. The decline was 3.1 per cent year on year.
Home Retail chief executive Terry Duddy said the business was in “good operational shape”.
“Overall the performance in the quarter was in line with our expectations. Argos' sales continued to be impacted by the decline in the consumer electronics market, while at Homebase, after a good first quarter which saw strong seasonal sales, the second quarter was more challenging,” he said.
Shares in the group rose more than 12 per cent on the results, but Hargreaves Lansdown Stockbrokers analyst Keith Bowman said the outlook for the company “remains extremely difficult”.
“Pressure on the group’s low-income customer base shows no sign of abating, while moves over recent years by the supermarkets into the electrical arena have arguably increased overcapacity,” he said.
“On the plus side, the update is no worse than expected. The decline in sales at Argos has slowed compared to the previous quarter, whilst changes in the sales mix have helped to limit the damage on the profit margin.”