Argos Owner Reports 28% Fall In Annual Profit

Argos owner Home Retail Group has reported a slump in annual profits as it prepares to be swallowed up by Sainsbury (Amsterdam: SJ6.AS - news) 's in a £1.4bn deal.

The group said its "benchmark" underlying pre-tax profit for the year to 27 February was down 28% to £94.7m amid tough trading and increased investment. Total (LSE: 524773.L - news) sales were down 1% at £5.67bn.

Argos has been rolling out fast-track home delivery and store collection services.

But like-for-like sales fell 2.6%, mainly due to falling demand for electrical goods such as TVs, tablets and white goods.

Bottom line results for Home Retail Group were hit by an £852m accounting charge related to the takeover by Sainsbury's pushing it into a pre-tax loss of £804m.

The group's chief executive, John Walden, admitted that Argos's performance over the year had been "disappointing" but said he was pleased with the progress of its transformation.

He said: "There is more work to do, but many of the building blocks are now in place."

The group's takeover by Sainsbury's was agreed earlier this month .

It (Other OTC: ITGL - news) is expected to complete in the third quarter of this year assuming no major intervention by the Competition and Markets Authority (CMA).

Finance director Richard Ashton said it did not expect to hear from the regulator until August.

Like-for-like sales at DIY chain Homebase – which the group has now sold to Australia’s Wesfarmers (Other OTC: WFAFF - news) for £340m – rose by 5.2%.