Home Retail posts 60-percent profit slump
Argos owner's mainly low-income customers have suffered most in the economic downturn
By CFOWorld staff | CFO UK | Published 12:36, 02 May 12
Argos owner, Home Retail, reported a 60-percent fall in profits on Wednesday, and announced it was cutting its dividend as consumers continue to feel the squeeze on their budgets.
Home Retail, which also owns DIY chain Homebase, said it remained cautious about the consumer outlook and warned it is operating in a particularly difficult trading environment.
"Prospects for the 2012/13 financial year remain uncertain as consumers' disposable income is impacted by ongoing inflationary pressure, together with low levels of consumer confidence," Home Retail's chief executive Terry Duddy said.
The company said it was likely to close 10 Argos stores over the next financial year, relocate several more to better locations and focus on selling goods to customers via multiple channels, including through mobile phones and the internet.
The group made an underlying pre-tax profit of £102 million in the year to 25 February.
Total sales fell 6 percent to £5.49 billion, with sales at Argos stores open over a year down 8.9 percent and like-for-like sales at Homebase stores down 2.0 percent.
Many retailers are struggling as consumers' disposable incomes are squeezed by rising prices, muted wages growth and government austerity measures, and as they fret about job security and a shaky housing market.
Argos has been particularly hard hit because its mainly low-income customers have suffered most in the economic downturn and because it also faces stiff competition from supermarket chains, specialists and internet players like Amazon.
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