HOME RETAIL Group forecast its fifth consecutive year of falling profits as weak consumer demand and competition from internet and supermarket rivals continued to impact sales.
Chief executive Terry Duddy said the company was on track to meet analysts’ expectations for the full-year, with an average underlying profit of around £99m. This marks a sharp fall from the £254m reported the previous year.
At Argos, like-for-like sales declined by 8.5 per cent in the eight weeks to 25 February, as shoppers cut back spending on electrical goods like televisions and video games. Sales of the latter were down 35 per cent in the period. Total internet sales grew slightly with internet penetration remaining strong at 40 per cent of Argos’ total sales, up from 36 per cent a year ago.
Duddy said the group shut 11 Argos stores in the period as leases came up for renewal but it reiterated that it was not going to embark on a rapid closure programme.
DIY chain Homebase also suffered a 6.5 per cent decline in sales in the fourth quarter, driven by the continued weakness in sales of furniture, kitchens and bathrooms.
Espirito Santo analysts said it was good news Home Retail had avoided another profit warning, but saw little scope of a quick recovery. “Trading remains tough and there is a long way to go before we begin to see margins recover at Argos,” they said.