| 7.8°C Dublin

Profits blow for Argos owner

Argos owner Home Retail Group today said annual profits dropped 13pc as it revealed the boss of its embattled catalogue chain was stepping down.

The group, which also owns Homebase, said Argos managing director Sara Weller will stand down in June for personal reasons.

Home Retail chief executive Terry Duddy will head up Argos until a permanent replacement can be found.

The news came as the group - which had previously slashed annual forecasts - confirmed underlying pre-tax profits slumped to £254.1m (€286.5m) in the year to February 26 after falling sales at its two retail brands.

But Home Retail has pledged to continue investment in readiness for the consumer spending recovery, by developing its online offering, opening new stores and pressing ahead with Argos refurbishments.

Today's results add to a grim picture emerging from the sector, following figures from supermarket giant Tesco yesterday showing a 0.7pc drop in fourth quarter sales.

Home Retail has already warned of an uncertain year ahead as British consumers are squeezed by the January VAT hike and government austerity measures.

Argos saw like-for-like sales drop 5.6pc in the last financial year, while Homebase saw same-store sales decline 0.3pc.

The group is planning for a similar outcome in the current year, with falling sales at Argos and for Homebase sales to remain "broadly flat".

However, the group has been slashing costs over the past two years - making savings of £125m - and said its strong cash position would help keep its investment programme on track.

Mr Duddy said: "Even in the current challenging economic environment both Argos and Homebase continue to strengthen their customer propositions by further investing in multi-channel initiatives, expanding choice, developing both ranges and services, enhancing product presentation in stores, in catalogues and online and delivering value to the customer."

Profits at Argos dropped 18pc to £219m, but Homebase profits rose 16pc to £47.6m.

So-called big ticket item sales were hit the most at Argos, with challenging conditions for furniture, televisions and video gaming products.

Homebase saw a different pattern as bathrooms and bedrooms were stronger than a year earlier in a sign of a homeowner trend to improve, not move.