Sales slump hits Home Retail Group’s World Cup hopes

Hopes that the World Cup might spark a mini-economic revival took a blow today when Home Retail Group reported a surprise slump in sales.

Retailers hope the football will provide a summer boost as the nation stocks up on drink coolers, TVs, barbeque kits and booze.

But figures from HRG — which owns Argos and Homebase — suggest consumers may be too concerned about the future to splash out.

Argos, Britain's biggest seller of TV sets, saw sales tumble 8.1% in the 13 weeks from February 28 to May 29. Investors were braced for a fall of only 4%.

Freddie George at Seymour Pierce said the figures were "disappointing and quite a lot worse than expected".

"Competition, we believe, is intensifying, particularly from the food retailers ramping up their internet offer and effort," he said.

HRG chief executive Terry Duddy reckons the wider economic issue is that the mortgaged middle classes, as he calls them, are doing fine, while those on lower incomes are struggling.

Evidence for this is that sales at Homebase are down just 1.4% over the same period.

"Economic conditions remain both challenging and uncertain, with this quarter proving difficult in terms of consumers' willingness to spend," Duddy said.

"Mass market customers have been having a tougher time, and feeling the pinch a little more."

HRG shares tumbled 10.8p to 227.2p on the news.