Home Retail Group blames Store Closures for failure to meet Sales Forecast

Posted on 18 January, 2015 by Kirsten Kennedy

Argos has been one of the largest turnaround successes on the high street in recent years, with store revamps and huge investment into services such as click and collect proving popular with consumers. However, the chain and its owner Home Retail Group’s latest results failed to live up to economists’ expectations.

Home-Retail-Group-blames-Store-Closures-for-failure-to-meet-Sale-Forecast

In the 18 weeks to the beginning of January, Argos’ like for like sales rose by just 0.1 per cent, a disappointing result given that predictions of a 2 per cent rise had been widely cited by economists. However, Black Friday on the 28th of November proved extremely popular for the retailer, as sales on that day rose by an astonishing 45 per cent.

At sister brand Homebase, the results were similarly lacklustre as like for like sales climbed by just 0.6 per cent and total sales dropped by 2.7 per cent. This, Home Retail Group claims, is due to the ongoing implementation of a cost cutting measure – 12 Homebase stores closed during the period, bringing the total number of closures in the past 12 months to 19.

Home Retail Group chief executive John Walden refused to be disheartened by the performance of both Argos and Homebase, claiming that both managed to achieve wider targets during the period.

He said; “I am pleased with our overall performance during our important peak trading period, having managed a volatile trading environment with good control of both gross margin and costs.

“This year’s adoption of ‘Black Friday’ promotional events generally by the UK market significantly impacted the shape of Argos’ sales over its peak trading period.

“In anticipation of volatility in trading patterns and the profit pressure caused by aggressive promotions, Argos pursued a more cautious trading stance over the period – this resulted in broadly flat like for like sales but achieved both improved gross margins and good cost management.”

It is no secret that Home Retail Group has been one of the most adaptive bodies in the retail industry when it comes to changing consumer habits, with executives at both Argos and Homebase quickly changing business models in order to meet the expectations and needs of customers. At Argos, this has led to the upgrading of technology within stores – customers can now, for example, browse for items on tablet computers rather than using the traditional catalogue – while Homebase has focused upon downsizing stores, introducing concessionary units and altering layouts in order to provide a more cohesive environment.

Mr Walden has not been the first retail industry figure to speak out against Black Friday as several, including the boss of John Lewis, have indicated that pricing pressures brought about by the US imported tradition can prove detrimental to retailers over the key Christmas period.

Mr Walden concludes; “The draw of discounts affected trade both before and after that busy weekend as consumers satisfied their Christmas shopping lists with bargains.”

Home Retail Group still expects to meet profits forecasts for the full year after the release of this week’s results.




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