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Argos, Mothercare and Halfords feeling the pinch: Pressure on the high street
(Guardian (UK) Via Acquire Media NewsEdge) Catalogue chain Argos yesterday blamed the squeeze on living standards faced by low-income families for dire Christmas sales.
The weeks leading up to Christmas are usually the best of the year for the struggling catalogue chain but its boss Terry Duddy said they had been a rollercoaster ride as shoppers cut back spending on gifts such as iPods and game consoles.
"Volatile is the word I would use," said Duddy. "Day-to-day, week-to-week sales have been all over the place."
Duddy argues that Argos customers, drawn from the mass market C2 and D socio-economic groups, are struggling because they have not benefited from falls in mortgage rates as much as those with higher incomes. Divergent sales performances he said were explained by "following the money" - "the John Lewis and Sainsbury's customer base has the money".
Last year Argos was in the frontline of a collapse in spending on consumer electronics with sales of flat-screen TVs and video games down nearly 20%, with analysts arguing that it needs to close as many as 400 of its 759 outlets. That advice was ignored yesterday with the retailer announcing plans to close only a handful of shops, even though Christmas sales were down nearly 9%.
Maternity and childrenswear chain Mothercare also reported a drop in UK sales as it battled fierce competition from supermarkets and the internet, as well as parents scrimping on big-ticket purchases such as pushchairs. It has announced plans to close more than 100 of its UK stores over the next two years after a disastrous year that saw chief executive Ben Gordon shown the door after a series of profit warnings. Its executive chairman, Alan Parker, said the troubled business was showing signs of improvement but its customers were under pressure with sales of its "baby plan" - which spreads the cost of kitting out a nursery - up 26%.
Other poor performers included Halfords, which has seen satnav sales fall off a cliff and was the only retailer to miss the snow this year. Last year it did well selling anti-freeze and shovels to motorists. Christmas sales were down nearly 5% and the firm - which trades from 467 Halfords stores and 247 Autocentres in the UK and Ireland - said even that bad trading performance could get worse.
"Halfords customers are feeling the pinch and are therefore deferring purchases, especially since its product range is not 'sexy'", said Panmure Gordon analyst Philip Dorgan.
Christmas also left a bad taste for Thorntons. It had to slash prices to shift its chocolates but sales were still down nearly 7%. The chocolatier, which has already said it will close a third of its stores, had issued a profit warning in December. Zoe Wood
(c) 2012 Guardian Newspapers Limited.
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