Sales at takeover target Argos dropped less than expected, parent company Home Retail reported today (10 March).
Argos sales fell 1.1% in the eight weeks to 27 February, halving the rate at which they declined last year. Home Retail said the transformation of the catalogue retailer was on track. In the full year, Argos sales dropped 2.6% while DIY chain Homebase, which was sold to Australian retailers Wesfarmers in January, jumped by 5.2%.
Sainsbury's, one of the UK's biggest supermarkets, has made two bids of £1bn (€1.3, $1.42) and £1.3bn for Argos in January. The grocer said it believed the possible takeover would create "an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation".
At the time, the offer boosted Home Retail's share price by 20%. The lift was much needed for Home Retail, which has been one of the most troubled stocks on the FTSE 250. The retailer issued a profit warning in late 2015, and had lost more than 35% of its share value since September before Sainsbury's bids and the Homebase sale sent it soaring.
In the statement published alongside the results, Home Retail chief executive John Walden said the chain is considering its position. South African home and furniture chain Steinhoff International has also made a bid for Argos, putting £1.4bn on the table in February.
"I am pleased with the continued improvement in Argos's sales performance in the period, together with the continued progress in the Argos Transformation Plan to become a digital retail leader," Walden added. The company said that group benchmark profit before tax would be £93m for the whole year, largely in line with expectations.