Warning by Argos muddies sales picture

A confusing December retail picture was further muddied yesterday by disappointing sales figures and a profit warning from catalogue retailer Argos.

Chiming with a downbeat statement earlier in the week from Sears, Argos's 4 per cent growth in like-for-like turnover paled in comparison with the 32 per cent rise in new year sales announced yesterday by John Lewis.

A clutch of trading statements from retailers and retail-related stocks such as Hi-Tec Sports and Courtaulds Textiles followed this week's weaker- than-expected retail trades survey.

The Confederation of British Industry, in its December Distributive Trades survey, said that although sales volumes were well up on a year earlier, they fell below retailers' expectations for the period.

The emerging picture has been one of winners and losers, with big-ticket consumer durable items selling better than fashion, footwear, toys and gifts. "Christmas was patchy. Not every retailer enjoyed the benefit of increased sales," said Clive Vaughan at retail analysts Verdict. "People had expected a boom and they've not got a boom."

According to Argos, sales in the 35 days up to and including Christmas Eve were up 4 per cent but the company warned that 1996 profits were unlikely to exceed the lower end of market expectations. Analysts had pencilled in profits of between pounds 140m and pounds 152m for the year to December. Argos's shares tumbled 109.5p to 623.5p.

Other retailers followed suit yesterday as the market fretted that the nascent consumer boom was benefiting some retailers considerably less than others. Marks & Spencer slipped 17p to 465.5p despite a statement from Courtaulds Textiles which said it had experienced strong demand from M&S, one of its biggest customers.

Next slipped 22.5p to 529p, House of Fraser was 5.5p off at 141p and WH Smith closed 16.5p to 443.5p.

Nick Bubb, retail analyst at Mees Pierson Securities, said he had expected like-for-like sales growth for Argos over the Christmas period of at least 7 or 8 per cent. He said Argos's Christmas figures made Dixons' trading figures out earlier this week look more impressive. Dixons said in the eight weeks to 4 January sales grew 8 per cent like-for-like from a year earlier. Despite that, its shares fell 27p to 511p last Wednesday on the day of the announcement and yesterday closed a further 13.5p lower at 494p.