Argos It

Well, as I predicted the decline of Argos gets ever more evident. Profits down 94% (Guardian) is saying something and quite loudly, though it seems Management can't hear it. The Argos business lost its MD in June and she hasn't been replaced yet. Why? And a review of how they do business concluded that they were doing the right things.

Despite this, or perhaps because of it(?) they are also looking into other areas, a TV channel and insurance sales, books, anything it seems. What the hell is Argos about and where is the leadership? In a booming economy retail life is like little skirmishes in war. Generally the army (business) is kept in good order and lower level officers fight little battles here and there. The army moves in the direction the General sets, but not with any panic.

A recession is a full scale battle, when the deployment of forces and the use of different aspects of the army needs to be played well. The General needs to be visibly active and calm, issuing clear commands. What of the above applies to Argos? Head Office recruit buyers who have no experience, which given a glance at the catalogue comes as no surprise. If it is an attempt to break the cycle and bring in fresh thinking it is to be applauded, though HRG don't seem to show that kind of initiative.

If you had to think of what Argos currently resembles most, I think it would be Woolworths. They are selling way too much in too many areas, relying on the bottom end of the market and without a clear strategy. I predict that the share price will start to suffer soon.

My other two favourites are probably reaching decision time too; Best Buy and Comet. Which one will go first, because go they will. There is over capacity in the electronics retail sector and both offer no clear advantage for customers. They are only worth the (knock down) value of their stock. Curry's/PC World stand to gain, but given that their profile continues to address the bottom end of the market and with no bold statements from the leadership, may not do half as well as they could.

This is fairly apparent , but the fact that the share price resolutely fails to move upwards, suggest the market is concerned about the lack of endeavour too. My bet is that the share price will move up, as the sector clears out the dead wood, but surely the objective should be to strike early and seize the day?