Argos reveals switch-on for TV shopping as chief leaves childrenswear and TV

Argos yesterday unveiled plans to expand into televisionshopping, books and children's wear as it continues to battleagainst falling consumer confidence.Parent company Home Retail Group(HRG) also revealed that Argos managing director Sara Weller willstand down in June for "personal reasons", with group chiefexecutive Terry Duddy taking over her role until a permanentreplacement is found.Ramona Tipnis, an analyst at Shore Capital,said: "The past few years have been a challenge for Argos and SaraWeller has, in our opinion, done a good job in a difficult consumerenvironment. We would not expect to see a step change in strategy atthis point."News of Weller's departure came as HRG - which hadpreviously slashed full-year forecasts - confirmed underlying pre-tax profits fell 13 per cent to GBP254.1 million in the year to 26February, in line with analysts' predictions.Duddy said the group,which also owns the Homebase chain, deserved to be reappraised afterTesco - the UK's biggest retailer - said on Tuesday that its generalmerchandise sales were under pressure.He added: "If your bestsupermarket, which is supposed to be gaining market share againstyou, is actually performing slightly worse, you've got to get areappraisal of the Argos performance."HRG said it would continue itsinvestment in preparation for an eventual consumer recovery, withcapital spending edging up to about GBP150m in its current financialyear from GBP143m in the previous 12 months.Initiatives at Argosinclude launching a new home shopping TV channel in the summer,expanding into children's clothes and launching a trial with a thirdparty to sell books, which could also be extended into other productcategories.The firm, the UK's second-biggest internet retailer, willalso continue to invest in revamping stores and expanding its mobileshopping offering with new applications for Android mobile phonesand the Apple iPad.Some analysts remained sceptical over whether theinvestments would do much to offset the challenge Argos faces fromonline retailers such as Amazon and major supermarket groups.PeelHunt analyst John Stevenson said: "Incremental business is alwaysgood, but it doesn't address the core threat."Annual sales at HRGdipped by 3 per cent to GBP5.85 billion.While a string of Britishretailers have issued profit warnings in recent months, HRG has beenparticularly hard hit as its predominantly low income customers aresuffering the most severe squeeze on their budgets. Analysts expectunderlying pre-tax profit for 2011-12 to fall to about GBP210m.Thegroup reiterated forecasts made last month that it expects a low-to-mid single digit percentage fall in like-for-like sales at Argos inits current financial year, along with a broadly flat outcome atHomebase.It added that costs would rise a little at both businesses,driven by higher input prices and its investments.The retailer hasnet cash of GBP259m and kept its full-year dividend at 14.7p.Marketspeculation has linked Wal-Mart, Asda's US owner, with a possibletakeover bid for HRG.But Arden analyst Nick Bubb said: "Someinvestors still dream that Asda will bid for HRG, but we would bevery surprised by that and we think the recent share price rally uptowards 220p provides another good selling opportunity."As bid hopesfade and dividend cuts fears mount, we still target a fall to 160p."