Home Retail: Sainsbury's takeover target Argos suffers Christmas sales dip of 2.2%

Catalogue retailer Argos suffered a sales slip of 2.2% in the Christmas period. Its owner Home Retail, which recently rejected a takeover bid by Sainsbury's, reported on Thursday (14 January) that "volatile trading patterns" disrupted sales in the 18 weeks to 2 January 2016.

Although sales fell in the renowned Argos stores, digital store concessions and collection points in Sainsbury's and Homebase stores offset the like-for-like drop. Overall Argos sales edged up by 0.9%.

Having previously set its profit guidance between £92m and £118m, Home Retail said that the trading period has caused pre-tax profit to be at the lower end of expectations.

John Walden, the chief executive of the retail group, commented: "Total sales at Argos ... were affected by volatile trading patterns resulting from particularly strong sales during Black Friday week, a shift in consumer demand from both the weeks before and after Black Friday, growth in digital transactions, reduced store footfall particularly on the high streets, and the continuing effects of price deflation."

At parent company Home Retail's DIY division Homebase, like-for-like sales jumped by 5%. However, as Home Retail continues to close Homebase stores across the country, overall sales fell by 4%.

On 5 January, Home Retail rejected a bid for the retailer by Sainsbury's made in November. The news of the bid in shares and cash of around £1bn (€1.37bn, $1.47bn) sent Home Retail's share price soaring.

Sainsbury's, one of the UK's biggest supermarkets, said it believed the possible tie-up would create "an attractive proposition for the customers and shareholders of both companies, establishing a platform for long-term value creation".

However, the grocer reportedly received a 'hostile' rejection of the offer. Home Retail is waiting for a new bid from Sainsbury's. The supermarket itself also suffered a sales slip over Christmas, although results were better than expected.