GUS to axe 800 jobs

Shoppers have turned to discount stores on the High Street

The UK's largest catalogue retailer is to axe 800 jobs following a 15% drop in its profits.

Great Universal Stores ( GUS) is known to consumers by its Argos and Kays catalogue brands.

Pre-tax profit fell to £448m in the year ending 31 March, compared with £514m the previous year.

Profits from UK home shopping dropped to £21m from £106.3m, as discount retailers on the high street became more popular.

The cost of distribution and restructuring its business also hit costs, GUS said.

Cost cutting

GUS now plans to combine its Argos catalogue business and home shopping chain in a bid to cut costs.

This will lead to 800 jobs cuts, which will take place over the next two to three years.

Argos has continued to fare well, with its like-for like sales up 14%, compared with a 7% decline for UK home shopping sales.

The company tried to deliver an upbeat message.

"While conditions in the home shopping market have been very testing, our other businesses have performed well," chief executive John Peace said. "Following restructuring, the group is much better positioned to deliver growth."

It says its new strategy will deliver £80m of annual cost savings over the next three years.

Last year, the company was the second worst performer in the benchmark FTSE-100 index, losing 45% of its value.