24 October 2012 10:55
Home Retail Group (HRG) has announced that it is to overhaul its Argos chain, putting its catalogue on the back seat and closing or relocating 75 stores over the next five years.
HRG said it would reduce the circulation of the traditional Argos catalogue, launched in 1973, as it refocuses the chain as a digital-led retailer. The group said that its Argos site is the second most visited internet retailer in the UK, with over 440 million site visits in the last 12 months
It also plans to trim down its 739-strong store estate and move shops to shorter leases to be able to relocate as part of a plan to use stores as product pick-up points for online orders.
HRG said: "Stores and catalogues will remain important, but their roles will be adapted in order to support a digital offer."
It stressed that having a "strong local presence" remained important.
The news comes after a six-month review of the Argos chain to revive the business.
In half-year results also announced today, Home Retail said underlying earnings at Argos were 3% down at £3.3 million with a return to like-for-like sales growth, up 0.6% in the six months to September 1st.
Terry Duddy, chief executive of HRG, said: "Against a challenging consumer backdrop, Argos has had a solid first half of the year supported by its multi-channel performance, with sales growth driven most notably by an improvement in consumer electronics. Homebase delivered a creditable performance in its peak trading period, given the adverse impact of poor weather conditions on its seasonal product sales and the difficult market conditions in big ticket categories.
"During the first half of the year we took additional action to control costs, tightly managed our working capital and delivered a strong cash performance which has strengthened the Group's financial position. Market conditions remain fragile and hence we will continue to plan cautiously, however we are in good operational shape as we approach our peak trading period.
"We continue to strengthen our customer propositions in an environment where customer shopping behaviours are changing rapidly, with both businesses improving product choice and delivering further value for our customers.
"We have also concluded a comprehensive business review of Argos which highlighted a clear opportunity to transform the business through increased investment in digital technologies. The transformation plan aims to deliver growth by repositioning Argos as a digitally-led business from a catalogue-led business, leading the market growth of digital commerce through online, mobile and tablet, and offering customers more products with the fastest, most convenient fulfilment options. This plan provides the right approach for Argos to achieve a long-term sustainable performance and profit recovery."