UK

Argos Boosted By Comet's Demise, But Homebase's Struggles Continue

17/01/2013 09:56 GMT | Updated 17/01/2013 10:49 GMT

Comet falling into administration last December helped to boost Argos' sales during the final weeks of 2012, with tablets topping the gift wishlists.

The chain, owned by the Home Retail group, also experienced growth in white goods and toys, which helped to offset disappointing figures in jewellery. Argos sales at stores which have been open for more than a year rose 2.7% in the 18 weeks to 5 January, well ahead of the forecast 0.2% rise.

Nick Hood, business analyst at Company Watch, told the Huffington Post UK sales were helped by Comet's exit from the market, but future performance would depend on the management's twin strategy of slimming down the number of stores and investing in developing a quality multi-channel platform.

Argos announced last year it would move away from a catalogue-led brand and focus on its multi-channel offering in a bid to keep up with its customers' changing shopping habits.

"They will be well aware of the continuing threat from powerful internet rivals and heavy discounting by the big supermarkets, which will only intensify," Hood added.

However, sister company Homebase offered underwhelming figures. Total sales at Homebase declined by 4.5% to £453 million. Three stores closed in the period, reducing the store portfolio to 337, and margins were hit by an increase in clearance sales activity.

“Homebase is struggling to win market share in a highly competitive and shrinking sector. Its performance over Christmas was significantly worse than expected," said Hood.

"It still has much to do to raise its game, especially improving the in-store experience for customers. The investment required to achieve these objectives is likely to be a drag on profitability for some time to come, but the alternative will be accelerating decline and rising vulnerability to the impact squeezed household budgets."