Profit warnings by big high street names due to poor performances over the key Christmas period are usually made after the holiday season.
But the owner of Argos and Homebase set a new record by issuing one two months before the big day, as bosses at Home Retail Group warned they would miss estimates.
John Walden, its chief executive, said the company was forced to issue the warning because of the unpredictability of Black Friday – the imported shopping day when people fight over televisions and websites crash.
His announcement sent the shares plunging 16 per cent, or 23.7p, to 126p – a level not seen for two and a half years, and the lowest since Mr Walden stepped up to be chief executive from his role as boss of Argos.
It even led one key City analyst to draw comparisons between Argos and the now-defunct Comet – which Mr Walden called “ridiculous”.
The company also blamed poor trading in the first half of the year at Argos, particularly in electricals, which have been up against tough comparisons and the lack of new tablets.
Mr Walden also said they would increase spending on marketing for a same-day delivery service as it looks to compete with Amazon.
All of this came on the day new research by Experian and IMRG predicted online shopping on Black Friday, 27 November, will top £1.1bn, up 32 per cent on last year, adding up to the most spent online in a single day in the UK.
The event caused major disruption last year, with the peak hitting on the first Friday in December. It led to some companies issuing profit warnings, after more shoppers than expected snapped up bargains on Black Friday, hitting profits. Game Digital was hit particularly hard, while John Lewis said the day had also stretched its stores and dented profits.
Mr Walden said: “As we get closer to peak trading, we’ve expressed that it’s an uncertain environment. Last year was so disruptive so we are just not sure how it will play out.” He also suggested this year Black Friday could stretch across the entire week.
Home Retail Group posted a 2 per cent fall in sales to £2.63bn in the six months to 29 August, with underlying profits up 10 per cent to £34.1m thanks to a strong performance at Homebase.
Tony Shiret, an analyst at Haitong, said Argos needed to recognise the downsides of its costly modernisation programme. He added: “The unwinding of the Argos story leaves us needing to be persuaded that it is not staring into an abyss.”
Argos appeared to admit the rollout was too costly, adding that a lower-cost version has been tested.
The group also revealed the rise in the Chancellor’s new national living wage (NLW) would hit its bottom line by £15m next year.
