Home Retail Group's Argos reports best performance in 8 quarters
Updated : 13:00
Total first quarter sales at Home Retail Group's Argos chain grew by 2.6% to £868m, the company said, adding that net new space contributed 2.5%, mainly as a result of store openings in the previous financial year.
Like for like sales at Argos grew by 0.1%, although the company said the “cannibalisation impact from the new space added in the previous financial year was around 1% and therefore Argos' underlying like-for-like sales increased by approximately 1%”.
The company also warned that it would have to increase redress provisions by £30m for the full year after charging excess fees to late paying customers.
It added that it was on track to complete its £1.4bn merger with Sainsbury's in the third quarter. Last month the Competition and Markets Authority said it would examine the deal to see if it would lead to "a substantial lessening of competition" for consumers.
DYI chain Homebase was sold to Australian firm Wesfarmers in February for £340m and rebranded as Bunnings, which was seen to make Home Retail more attractive to its suitor Sainsbury.
Chief executive John Walden said the result was Argos' strongest sales growth performance in eight quarters.
"This was achieved against the challenging backdrop of constrained seasonal product sales due to poor weather, on top of a deflationary pricing environment," he said.
Sales grew in both electrical and non-electrical product categories during the quarter, with the growth in electricals principally attributable to the performance of TVs, mobiles, computers and tablets, partially offset by a sales decline in white goods.
The growth in sales of non-electrical products was largely driven by furniture and general sports, partially offset by weaker sales of seasonal products, it added.
Internet sales grew by 16% in the quarter and represented 49% of total Argos sales, up from 44% for the same quarter last year. Within this, mobile commerce sales grew by 17% to represent 29% of total Argos sales, up from 25% in the same quarter last year.