Argos Parent Company Issues Profit Warning, Games Sales Partly to Blame

The Home Retail Group, owner of the Argos chain, has issued a profit warning, noting a reduction in the estimated profits for the year.

Home Retail has said it now expects between £250 million and £255 million profit instead of the previously estimated £263 million of two months ago.

The videogame market was especially cited as a weak area of growth for the company, with low game sales offsetting the gains in consumer electronics and other categories. The company also owns DIY retailer Homebase.

Year-on-year sales are due to be down 5.6%, with Home Retail Group shares falling 8% on the news.

CEO Terry Duddy said: “There are clear signs of further pressures on consumer spending, with recent trading conditions, particularly at Argos, proving to be more difficult and volatile than we anticipated. Even some of the promotional activity is not prompting a positive response.”

Media retailer HMV has also been suffering recently, albeit more drastically than Argos. The parent company, HMV Group, recently announced it would be closing 60 stores after a weak Christmas sales period and last week called a second profit warning. The company is struggling to pay back its £130 million debt.

British consumer confidence isn’t helping either stores, partly down to the austerity measures the government is introducing, including a rise in VAT.

Nationwide building society, which measures the Consumer Confidence Index, warned in January (.pdf) that shoppers were not splurging on goods and noted that despite potentials for growth it is “likely to take time for the feel good factor to filter through and it may be some months before we see significant positive movements within the Consumer Confidence Index.”

via: GamesIndustry.biz