Argos and John Lewis blame H1 sales falls on tech

Argos and John Lewis have both posted a drop in sales during the first half of 2015, partly due to a lower demand for tech goods.

Argos said that sales of electrical products continued to decline, principally driven by TVs, tablets and white goods, while John Lewis blamed a lack of new product launches in the home technology market.

Sales in John Lewis’ Electricals and Home Technology (EHT) category fell by 0.7 per cent against strong figures from the same period last year, where it said it saw "exceptional demand" in the run-up to the 2014 FIFA World Cup.

However, it has just announced that the Apple Watch will be available in its shops, which it says will give the chain "more momentum in technology sales for the second half". It has also announced a third national distribution centre in Milton Keynes.

Argos’ total sales during the 26 weeks to August 29th 2015 fell 1.5 per cent to £1.74 billion, while John Lewis generated sales of £1.94 billion and like-for-like sales up three per cent.

John Lewis’ operating profit also fell by 16.3 per cent to £47.1 million. The company says it was "impacted by restructuring costs, incremental costs for holiday pay and absorbing a greater share of centrally incurred functional costs".

"It also reflects the costs associated with the ongoing shift in both channel and fulfilment mix, a consequence of operating in an omni-channel world," John Lewis added in a statement.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, commented: "’This has been a solid first half for the Partnership in a difficult market. Both Waitrose and John Lewis are growing sales and increasing market share. Profit before tax and exceptionals was down by £33.8m to £96.0m, predominantly driven by higher pension charges arising from volatility in the market driven assumptions and last year’s property profits.

"Excluding these, at a trading level our profits were broadly level with last year, despite the turmoil in the grocery market. That reflects tight management of costs and the steps we have taken to strengthen the appeal of our trading brands, where we have seen an encouraging increase in the number of customers shopping with us."

John Walden, Chief Executive of Argos parent Home Retail Group, commented: "Argos delivered an improved sales performance in the second quarter. It made good progress with new stores, opening more than 50 digital concessions within Homebase and Sainsbury’s, which have generated encouraging early results. 

"Consistent with our previous guidance, Argos’ sales continued to be adversely impacted by the performance of a number of key electrical product categories as well as weaker overall market conditions in August."

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