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Broker note suggests Argos is repositioning to become an 'Amazon with stores'

Argos Romford exterior

Morgan Stanley's suggestions Argos was trying to reposition itself as an "Amazon with stores" sent shares higher.

Investors seeking a bargain piled in to Home Retail Group yesterday (29th June), after a broker note suggested its Argos business was repositioning itself to become an “Amazon with stores”.

The bullish broker note begged investors to see beyond Home Retail Group’s disappointing financial performance.

Shares in the company are down 20pc so far this year, lagging behind the wider UK general retail sector by 27pc. Even so, Morgan Stanley upgraded the stock to “overweight” from “equal weight”, lifting its target price to 180p - up 10p.

Three years ago Argos announced it would be scaling back the number of stores in its estate in a bid to transform the business. However, such plans were short-lived. Management are now looking to increase the store count in a bid to make Argos “more convenient”. The transformation plans include a new “click & collect” service, allowing customers to pay for goods online - something they couldn’t do until recently.

Argos is steadily moving away from the “dowdy and dated experience of catalogue-based shopping”, Morgan Stanley’s analysts said, with 70pc of the retailer’s sales now ordered or reserved online.

Source : Tara Cunningham - The Telegraph

02 July 2015

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