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The week ahead: Home Retail Group to report on Thursday

Catalogue chain Argos is set to deliver more sales cheer on Thursday as it continues to benefit from turnaround efforts and the demise of electrical chain Comet.

The City expects parent Home Retail Group to say Argos sales rose 2.1% in the eight weeks to March 2, although this will come as a slight slowdown on the 2.7% jump seen in the 18 weeks to January 5.

The trading update comes amid signs that confidence is returning on the high street, with upbeat figures from the British Retail Consortium (BRC) for February showing sales grew at their fastest rate in more than three years.

It is also expected to confirm further progress of the digital transformation at Argos, which has moved away from its traditional printed catalogue to screen-based ordering.

At its last update, the group said the internet now accounted for 42% of total revenues, while mobile sales leapt 125% as a result of its new tablet and smartphone apps and improved website.

However, Deutsche Bank analyst Warwick Okines added a note of caution.

He said: “Home still faces many challenges, and there will be few concrete developments to the transformation plan in spring/summer, except the new website that launched last year.”

But he said in the meantime the withdrawal of Comet should “offer a tailwind”.

Home Retail’s DIY brand Homebase is expected to remain under pressure and is forecast to report ongoing declines in sales, with the City pencilling in a 2.8% drop at the end of the year.

The BRC recently said DIY firms in particular had been hit by the January snow and recent freezing weather.

Source : Annabelle Dickson & Holly Williams - EADT 24

10 March 2013
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