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New MD finds Argos in a worse state than expected

Hungry bears mauled Home Retail, driving shares of the Argos-to-Homebase group 6.8p lower to 114.8p.

They responded to industry gossip that John Walden – former internet boss of Best Buy, brought in recently to revive its struggling catalogue chain Argos – has found it to be in an even worse-than-expected state.

As a result, mega store closures and a full-blown profits warning could be announced before the group’s scheduled results on May 2.

Before he had got his feet under the table at Argos, Walden held various interviews stating that he had been given a blank piece of paper by group chief executive Terry Duddy. Analyst Phil Dorgan at Panmure Gordon said then that he needed to start writing a list of store closures on it.

Argos sells products through 750 stores as well as over the internet. Same-store sales in the final two months of the financial year fell by 8.5 per cent to £480m in the eight weeks to February 25. Homebase was also disappointing with same-store sales 6.5 per cent off at £195m.

But Argos is Home Retail’s biggest headache and the market, particularly major shareholder Schroders, nervously await details of Walden’s future strategy. Dorgan and other analysts are adamant that a reduced store estate is drastically needed to reverse the sharp decline seen at Argos in recent years.

Source : Geoff Foster – ThisIs

28 March 2012
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