Company Vitae: Argos

The catalogue store is the UK's largest toy retailer and its second largest furniture supplier. With roots in the 1970s, can it see off the internet threat?

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Last Updated: 06 Nov 2012

Formative years

Argos began life in 1973, the brainchild of Green Shield savings stamps entrepreneur Richard Tomkins, who apparently came up with the idea while he was on holiday in the Greek city of the same name. Green Shield was (as those of a certain age will recall) a kind of early loyalty scheme that called for the sticking of hundreds of tokens in special booklets which could then be exchanged for items from a home shopping catalogue. Like Nectar points but with a lot more glue.

But Tomkins reckoned he could make more money from shops selling catalogue items for cash, ditching the stamps altogether. He rebranded his entire Green Shield business as Argos and hit the high street running, with 17 stores and 1,000 staff from the word go.

Argos went from strength to strength as recession-hit 1970s shoppers flocked to buy cheap and cheerful gifts, homewares and electrical goods. In 1979 Tomkins sold it to tobacco giant BAT for £32m - that's a lot of stamps.

Recent history

After listing on the LSE in 1990, Argos was bought by catalogue retailer GUS in 1998 before being demerged again in 2006 as part of Home Retail Group. It remains part of HRG (which also includes DIY chain Homebase), has over 700 stores across the UK, Ireland and Spain and is responsible for around two-thirds of the group's £6bn annual turnover.

But competition from supermarkets and of course the internet is hotting up. Half-year like-for-like sales were down 6.5% and operating profit slid 23% to £93.2m for the same period. Rumours of a sale have been circulating.

Who's the boss? HRG head Terry Duddy knows Argos as well as anyone - he was chief exec from 1998 to 2006. Sara Weller is second in command, MD of Argos since 2004.

Secret of its success

Argos's USP has been that it can offer a wider range of goods, more cheaply than rivals. By eschewing costly display space in favour of its famous 1,500-page laminated catalogues, Argos can offer a huge inventory and keen pricing. But now it's going to have to ensure the combination of online and offline services it provides is more than the sum of its parts.

Proudest achievement Argos' iPhone shopping app was downloaded no fewer than 500,000 times within three weeks of its May 2010 launch.

Don't mention Sofa burns. Argos is one of three retailers facing a total compensation payout of up to £20m after hundreds of customer suffered severe allergic reactions to a preservative in Chinese-made furniture sold by the firm in 2008.

VITAL STATISTICS

Revenues: £4.35bn

Operating profit: £266.2m

Stores: 745

Average transaction value: £25

[All figures are for the year to February 2010]

Tags:
Finance Retail

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