Argos suffers sharp slowdown

ARGOS, the stores and catalogue business, has suffered a sharp slowdown in sales growth in recent months, although it is still outperforming its competitors, says parent company GUS.

Delivering an update on first-quarter trading to shareholders, GUS chief executive John Peace said like-for-like sales at Argos grew by 5% in the three months to 30 June. That compares with a growth figure of 13% when GUS reported full-year results in May.

The City had been expecting a slowdown at Argos, particularly after its cracking performance last year. Peace said consumer spending had 'moderated' in the first quarter although overall sales at Argos were up by 10% during the period, boosted by strong demand for furniture and electricals. Further expansion of the product range is planned in furniture, textiles, bedding and housewares.

Margins at Argos were in line with the previous year's and the 5% underlying increase compares with a 12% advance in the comparable quarter last year.

First-quarter sales at GUS's home shopping side fell by 2% although the average amount spent by each customer was up. Sales from direct catalogues, including Marshall Ward and Abound, grew strongly.

At Burberry, which pressed ahead with its stock market debut earlier this month despite turbulent conditions, total first-quarter sales rose 12%, or 5% like-for-like. On the retail side, boosted by new store openings, the increase was 20% and there was double-digit growth in underlying sales.

The group's largest business, credit-checking company Experian, saw total sales rise by 5% although performance remained sluggish in North America. Excluding acquisitions, North American operations were down by 4% in dollar terms.

For the group as a whole, Peace said trading is going according to plan and he looks forward to the rest of the year 'with confidence'.