Adapting to the digital world hasn't been a straightforward task for any legacy retailer. But one company that seems to have made a reasonable go of things is Argos and Homebase owner Home Retail Group, which today reported a 32% boost in pre-tax profits to £92.8m, and sales up 1% to £5.7bn, in the year to the end of February.
Argos in particular has made great hay from its shift to digital. The catalogue retailer's total sales were up 1.1%, likely thanks to heavy investment in its distribution network, which now offers same-day collection for around 20,000 products.
That's a big asset for a retailer competing so closely with the likes of Amazon, whose customers have to wait at least a day to get their hands on their order. Many would have expected an impersonal, broadline retailer like Argos to be first against the wall come the digital revolution, but for now it's proving critics wrong.
'Argos has progressed well on its plan,' said Home Retail chief exec John Walden. 'In fact, as I reflect on how far the business has come in only two years, I am pleased with how much has been achieved. Our team has accomplished a great deal, and is now operating in a faster-paced and more innovative manner.'
Visits to its 'digital channels' – its website and apps – were up 23% on the previous year to a not-insignificant 900 million, and online transactions now represent 46% of Argos's total sales. Its neglected sibling Homebase, on the other hand, hasn't enjoyed such a fruitful transformation. The home and garden shop's digital sales grew by just 10% in the year to represent just 8% of total sales.
It's perhaps unfair to compare that directly with Argos's 46% - you're more likely to buy an iPad or camera online than a bag of compost – but it still shows how Homebase has struggled to make the most of the web. With that in mind it's probably unsurprising to see its sales were down 0.7% to £1.5bn. That's partly because it closed 27 stores last year, which hasn't helped revenue figures. It's like-for-like sales were up 2.3% though, which suggests the closures were probably a good move.
Altogether it seems Home Retail's performance has been good, but not great, and it's not resting on its laurels. 'Our sales performance in the first half [of this year] is likely to be more challenging, as Argos focuses on improving its technology and customer experiences, and we anniversary (eh?) both strong Argos sales in certain slowing technology categories and strong seasonal performances in both businesses,' Walden said.
Argos seems to be on the way to strong growth but Home Retail will need to come up with something pretty spectacular if it wants Homebase to do as well as its big brother.