The owner of the Argos chain has pledged to revitalise the business in order to better compete with online rivals such as Tesco and Amazon.
The board said the plan will make Argos into a 'digital retail leader' after it unveiled the first rise in sales at the chain for five years. Home Retail Group, which also owns home improvement chain Homebase, wants to add more own-brand product to the Argos website and attract a broader customer base.
Home Retail chief executive Duddy launched a £300 million investment programme last year and says the improvement plan will take three to five years. He wants to acquire more brands and make better use of existing ones such as homewares range Habitat.
Home Retail is struggling to improve its performance in the face of fierce competition. Profits have slipped and in the year to March 2 were only about a quarter of those reported five years ago.
Argos was one of the first High Street retailers to build an online site in 2002. Yesterday it said multichannel sales accounted for 51 per cent of sales, more than half of revenues for the first time. It has also made inroads into the mobile market with new apps.
The number of shoppers visiting Argos on mobile devices jumped 116% in the year to March, helped by the launch of new iPad app at the end of 2012. The retailer said orders from mobile phones and tablet computers now account for 10 per cent of sales.
Home Retail Group said its profit dropped for the fifth straight year as it planned to reinvigorate its Argos chain. Benchmark profit before tax across the group fell 10 per cent to £91 million mainly because of a poor performance at Homebase. Profit at Argos increased 6.5 per cent to £100 million on sales of £3.9 billion.
It said multichannel sales at Homebase, where profit halved to £11 million on declining sales of £1.4 billion, rose 16 per cent and now account for 5 per cent of sales.
However, some analysts believe Homebase's performance could worsen and that the five year plan for Argos may not be not quick enough to cope with the rapid changes in the UK retail market.
Panmure Gordon analysts Philip Dorgan said: 'We think that Argos's turnaround will take too long and that Homebase is in danger of slipping into losses. We also believe that, as with many traditional retailers, Home Retail is making a virtue out of a necessity in that they are building a substantial store portfolio into an online model. Long-term we think this will fail.'
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