Digital strategy pays off for Argos with almost half of sales online

The digital makeover of catalogue chain Argos showed early signs of progress today after strong trading figures for the peak Christmas period.

Its owner Home Retail Group said internet sales now accounted for 42% of all Argos business as more shoppers took advantage of the chain's new tablet and smartphone apps, as well as click and collect services.

Argos sales rose 2.7% on a like-for-like basis in the 18 weeks to January 5, meaning Home Retail's profits for the year to March will be £10 million ahead of current City forecasts of £73 million. Shares opened more than 14% higher today.

The Argos business, which sells products in 739 stores as well as online and through a television channel, took a total of £1.74 billion over the 18 week period, a rise of 1.6% when store closures are accounted for.

Consumer electronics, particularly tablet computers, drove the improvement, while there was also growth in white goods, toys and core electricals. This was offset by weaker trading in homewares and jewellery categories.

Home Retail announced plans in October to scale back circulation of its catalogue and revitalise the business through its digital presence.

Stores will be kitted out with internet access and Wi-Fi, with a fast-track collection service and customer service for orders.

Home Retail hopes to grow Argos sales from £3.9 billion to £4.5 billion a year in 2018 in an "ambitious but achievable" overhaul that comes after a period of declining sales.

Matt Piner of retail consultancy Conlumino said the figures showed the popularity of "click & collect" shopping over Christmas.

He added: "Downsizing its store portfolio to provide an optimum network of click & collect hubs will now be crucial if the retailer is to build on this performance."

Home Retail's Homebase division, which has 337 stores, saw total sales decline by 4.5% to £453 million, including a fall of 3.9% on a like-for-like basis.