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Click and collect service reaps rewards for owner of Argos

ARGOS and Homebase owner Home Retail Group has seen its shares fall four per cent in spite of posting a strong set of quarterly sales figures.

The business said warm weather plus demand for televisions and big ticket items such as kitchens had helped it in the period.

It is also seeing the benefits of investing heavily in its click and collect service which lets customers order goods online then pick them up in stores.

The group reported Argos internet sales now represent 42 per cent of all trade while mobile commerce grew by 56 per cent.

At DIY chain Homebase demand for fitted kitchens alongside seasonal plants and power hoses saw like-for-like sales up by 7.9 per cent.

Argos, which has 734 stores, lifted like-for-like sales by 4.9 per cent in the 13 weeks to May 31 after seasonal products such as barbecues sold well alongside games consoles and televisions ahead of the World Cup.

Former Argos boss John Walden, who is now in charge of the whole group following the recent departure of long-time chief executive Terry Duddy, said: "We are pleased with this encouraging start to the year, but remain mindful that we will annualise more challenging comparators in both businesses through the remainder of the year, including Homebase's very strong seasonal performance in the second quarter of last year."

During the period Argos sold more than 32,000 folding camping chairs and over 270,000 bags of children's play sand. Homebase, which has 322 stores, sold more than 93,000 barbecues and enough turf to cover 36 football pitches.

City analysts had expected Argos to turn in like-for-like sales growth of 3.7 per cent, and Homebase to post like-for-like sales of 7.5 per cent.

The group said it expects full-year pre-tax profits to be in line with market forecasts of £129 million, compared to the last financial year when it posted a full-year pre-tax profit of £115.1 million.

Argos has scaled back the print edition of its catalogue in favour of digital versions, while it is also closing or relocating at least 75 stores over the next five years.

The company believes its estate of 734 Argos stores is a potential strategic advantage in the digital era because customers will increasingly want local product collection and appreciate face-to-face customer service.

David Alexander, a retail consultant at Conlumino, said Argos's store estate was perhaps its greatest advantage over pure-play internet retailers.

He added: "While click & collect has been an obvious success story for Argos, improving the home delivery side of the business is the next item on Mr Walden's agenda as it seeks to keep pace with the e-commerce giants." Shares were down 8.1p to 192.5p.

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