Should Argos crash worry eBay?

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Home Retail Group, owners of Argos, have seen their shares crash in value by almost a third in the past fortnight. If the wheels are coming off the group that could be a big concern for eBay who have closely allied themselves with Argos for eBay’s next generation of delivery services.

The shaky reaction by investors came when Argos issued a profit warning citing Christmas 2015 “seems less predictable than usual” with uncertainty around Black Friday, an increased level of investment and a challenging first half of the year.

Argos Share PriceIt’s worth remembering that Argos are in the middle of a multiyear transformation plan including Fast Track Collection and Fast Track Delivery, digital concessions and growing Internet and mobile sales.

Tony Shiret, an analyst at Haitong Securities touched a nerve when he compared Argos to Comet, MFI and Woolworths, all of who disappeared from the UK’s high streets.

Tony pointed out that in the last downturn when Argos shares crashed to a low of 69.85, Argos had EBIT (Earnings Before Interest and Tax) of around 8.5% compared with today’s 2½-3%.

John Walden, Argos CEO, called the comparison to the failed high street retailers as ridiculous pointing out that the new digital Argos stores were outperforming traditional sites and so more would be converted.

Argos are doing many great things, their digital offerings, speed of service for collections and new delivery services are all fantastic for consumers. Reportedly the high street is winning against Amazon in entertainment retail sales, with Argos’ share rising by a percentage point to a 4.2% market share.

I’d hate to see Argos disappear from the UK retail landscape and it would likely be devastating for eBay’s fulfilment plans. Is it a good strategy for eBay to exclusively partner with just one retailer? From the other side of the coin, perhaps the Argos strategy to partner with eBay for their next generation fulfilment service is part of their turnaround plan to extract full value from their recent investments?

Could Argos go pop? Possibly, but probably unlikely, Argos’s share price has been twice as high as it’s current value, but it’s also been almost half the current value in the not too distant past. Tony Shiret raised the question, let’s hope the answer is an resounding “No”.

53 Responses

  1. There is another point. My late father always said Buy Low and Sell High. Thus if you analyse Argos and decide that the current Share Price is unreasonably Low then now maybe the time to buy Argos Shares. I will be having a look at them but before anybody says that I am recommending that you buy them I am not. I am just advising that now maybe the time to look at them. If you think that the Stock Exchange has got it wrong then maybe buy some. If however you decide that the Stock Exchange has got it right then don’t buy them.

  2. its only the UK that this effects most of ebay have never heard of argos , they wont worry ,they will just use someone else in they need to

  3. Yes, they should be worried. Anyone holding shares in UKs tradtional retailers should be scared.

    Even non tradational retailers like ASOS for example, today they are trading at 73.85 P/E which is stupidly expensive.

    The market place is seriously skewed at the moment againt tradional retailers.

    All you need to do is goto ebay and search for baseball cap, and see the mountains of counterfiet goods on offer for example. When you can get access to alternative products so cheaply and easily, why would you bother shopping at argos or any place that stocks genuine products. Hence the death of many retailers already.

    I was at the mercedes dealer this week waiting for parts. A man came in and said his batteries in his key fob keep running out every 3 or 4 months. Hes tried Duracell and Verta. The dealer said he could buy a pair for £9.75 genuine mercedes and customers had reported they lasted alot longer.

    He promptly walked out.

    As i waited, i realised this is not a duracell vs verta v mercedes branded debate.

    But the fact the man is simply purchasing very cheap fake batteries. If people think they can get a genuine battery for 1.25 inc delivery online. Why pay £3.99 at argos. The man clearly didnt see he was purchasing real v fake batteries or the difference between changing it every 4 months v 3 years.

    Everyones a tight wad buying cheap trash from china, which is over speced in the description or counterfiet. But its okay because its cheap and i can jusy throw it away.

    Just no one will admit it.

    This is why UK retailers are struggling.

  4. and talking of Mercedes
    they have it right,
    , we run 3 mercedes, and genuine Mercedes parts are cheap in comparison to most other makers parts , so its not so cost effective or worthwhile for the Chinese to fake them

  5. mmm Clearly you not because youd cleary have a clue otherwise

    Mercedes fakes have been common place for many years.

    There are many many stories and it’s a global market, In the UK there are many chavvies wanting for save £10 on a £100 part. But driving a premium brand car. Personally id rather get a focus and use real parts. But people want to impress people they dont know and dont really car about and probably wouldnt like. So they buy 3 mercedes. Even if they have to fit them with the cheapest, lowest quality, fakiest parts available.

    I think many are fitted to your 3 mercedes, due to your very narrow minded view on the world.

  6. I used to shop a lot at Argos. Then they converted my local store in Manchester to a digital store. It’s awful. First they had iPads to select your stock and several of them were not working days after the store reopened. Then they switched to Samsung tabs and last time I went in almost half of them weren’t working.

    The quick pay machine was broken and kept rejecting my card, the staff were clueless, and the whole thing was just a horrible shopping experience.

    The last time I shopped there I queued for 45 minutes (had to queue because I had a voucher) there was only person actually serving on a Sunday afternoon. Another member of staff couldn’t do anything without asking for help and another just walked off and disappeared. When I complained (and I wasn’t the only one) all I got was a half hearted apology and was told the manager was upstairs interviewing so they’d have more staff soon.

    TL:DR – if Argos keep up this digital store expansion, they’ll go bust IMO.

  7. I’m howling at the “Argos = High Quality, eBay = Cheap Fake” debate going on here.

    for several categories, Argos have the buying power to specify a lower-quality, Argos-only version of mainstream items (already available cheaper on ebay, for the higher quality version).

    we often run the grade-A version as normal, sometimes cheaper than Argos does the grade-B, and once Argos have had their run, we buy the Argos version remnants in cheap, and sell that one on even cheaper still.
    – this is across many many categories, Argos specific items are costed down from the originals, not made better.
    – Kinda stymies your “idiots buying cheap false-economy items on ebay when they should buy high quality at argos” argument.

    also from previous experience, i know of loads of brands who produce the EXACT SAME item, put it in three different boxes, and charge three times as much for the one in the nice box.

    customers are getting savvy a lot of the time, if you can get the same item, cheaper, then you do.

    not to say there isnt a lot of false-economy items out there these days. a lot of the time i think even the so called High Quality items, are still relatively short lived, compared to the same product made just a few years ago.

  8. Okay, not to bother.

    My mate ‘dave the rave’ said bekos have the Same parts like the plug , which are made in a the same factory. Just a different box and logo.

    Result, just saved £500.

  9. Id much rather an indesit over a beko.

    With better spin speed, performance, energy rating, less noise and better life.

    You cant compare a £150 washing machine to a £700 one.

    You might be able to compare a £15 blender to a £20 one. But have you really saved?

    Most people want screw every last penny out of a purchase. That doesnt make you savvy it just shows your tight.

  10. Most people are tight, but would never call themselves that, they prefer the term savvy.

    So argos should sell cheap junk to them whilst making those people think they are clever fpr buying whilst having done one over on those evil companies and won.

    After they can drive home in hpi audis, cause they are so clever and rich and feel good they saved 5 quid on a blender.

  11. OMG can someone get ifellow a job. I would at Argos but will most probably lose mine when it goes under.

    @ifellow you are boring and just talking to yourself on here.

    I bet your wife is playing away with your brother due to your boring and repetitive personality.

    Yes Argos sells cheap products, yes beko and indesit are washing machines. Yes there is a difference in part quality and OEM is always better. YES WE HAVE ALL HAD A GO ON YOUR MISSES!

    Can you please stop the going on and on and on and on and on……

  12. Think it should be small Ebay sellers that worry more than Ebay themselves. Ebay have aligned themselves heavily with Argos, if Argos start making noises about lower than expected sales and profits am guessing that obliges Ebay to crank up the knob on Cassini for Argos positioning in best match.
    Call me a cynic, but if I wanted my sales to increase and had a partner that was heavily dependant on me for its future distribution network (not to mention sales) maybe I’d be making the same kind of noises.

  13. Ok I can see the trend Ebay forgot it started life as an online car booter and then got ambitions. Retail sales online are being swamped by Chinese imports (what price EU rules) Ebay has cloned Amazon. Time to go independant


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