Reports that Argos owner Home Retail Group shares have rebounded buys time to attempt reinvention
Going short on shares in Home Retail Group has been a popular bet, apparently. It’s hard to understand why. Yes, the Argos stores look like a hangover from the 1970s but there are other considerations. The company has a wall of cash (it’ll be £300m at the end of February); Argos’s like-for-likes sales finally stopped falling last summer; and it’s been clear for weeks that online retailing, where management has shovelled investment, did well at Christmas.
So it was that Home Retail’s shares rebounded 12% on the mildly good news (or bad, from the short-sellers’ point of view) that Argos’s sales were up 2.7% in the Christmas period and group profits should beat forecasts of £73m by £10m.
At its peak in 2007-08, Home Retail was producing nearly £400m, so £83m won’t kill outright the notion Argos is in terminal decline. But the cash pile is the thing. It buys time to reinvention. And, on current form, this high street oddity is getting closer to being on the right side of retail’s internet revolution.