Argos parent company loses £200m in profit warning

GUS To De-merge Argos And Experian

The parent company of Argos saw £200m wiped off of its value after it issued a pre-Christmas profit warning.

Shares in Home Retail Group dropped 16% following the warning that profits were likely to be lower than expected. Argos has recently invested millions of pounds in a multimedia ad campaign and 700 vans as well as employing 3,000 new drivers to make sure a new delivery service was in place by Black Friday on November 27.

Home Retail Group chief executive officer John Walden stated that despite the investment which he defended, saying: “for the long term health of the business that was the right thing to do”, public reaction to Black Friday could not be accurately predicted.

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Walden said: “We are certainly competing hard and have plans based on how we think Black Friday will unfold, but it is very hard to estimate. Retailers who believe the pattern is certain are guessing.”

Earlier this year John Lewis has already called the effect of Black Friday, a retail sales concept recently imported from the US, into question, stating that it needed to be reined in and risked damaging Christmas trading.

The group said it believed that its annual profit before tax would be slightly below bottom end of market expectations, which were between £115m and £140m.

Argos has been investing in same-day delivery capabilities to combat the same delivery service offered by Amazon whilst at the same time modernising its stores from traditional pen and paper ordering to a tablet-based system.

Walden stated these new ‘digital’ stores were out-performing their traditional counterparts which would see more being converted in the future.


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