Nobody cares about Argos anymore

Argos owner Home Retail Group has announced a pre-tax profit loss of £804 million ($1.18 billion) in the year up to 27 February 2016.

Most of this is related to “an exceptional goodwill impairment charge” of £852 million relating to a Sainsbury’s bid to buy Argos.

A goodwill impairment charge is a means of balancing a company’s fair value and carrying value when an intangible asset, such as public perception of a brand, is overestimated.

Even without that charge, annual profits plunged 28% to £94.7 million, while sales were down 1% to £5.6 billion.

Argos like-for-like sales were down 2.6%, though this was offset by a 2.6% net space sales change, meaning total sales change was flat.

However the company made good progress on transitioning to digital stores, with a current total of 177 in the new format — 21% of the Argos store estate.

Despite the profit drop, Home Retail Group Chief Executive John Walden said it had been a “landmark year.”

“We have completed the sale of Homebase and recommended to shareholders the offer from J Sainsbury plc for the acquisition of the remaining Group, principally Argos. I am pleased that, with its offer for Home Retail Group, Sainsbury’s has recognised the good progress we have made in transforming Argos into a digital retail leader.”

Walden also noted that Home Retail Group beat its forecast for the year, with a cash balance of £623 million.

Business Insider reported earlier this month that Sainsbury’s £1.2 billion bid to takeover Argos was going ahead, and that Home Retail Group shareholders would own 12% of the supermarket giant if the sale goes ahead.

Shares in Home Retail Group dropped 0.53% this morning, landing at £16.96 as of 8:50 AM GMT:

NOW WATCH: THE STORY OF GOLDMAN SACHS: From foot peddlers to a powerhouse

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.