Home Retail Group Plc chief Terry Duddy said he was not under shareholder pressure to resign after Britain's No. 1 household goods retailer warned dire Christmas sales at its Argos business made a full-year dividend cut inevitable.
Duddy told reporters on Thursday he had met all of Home Retail's top shareholders after the firm posted a 70 percent slump in first-half profit in October.
They are clearly disappointed with the overall performance but are not talking about those kind of (management) issues, he said. Many shareholders ... actually provided support, which I was grateful to receive.
Shares in Home Retail, which prior to Thursday's update had lost 57 percent of their value over the last year, fell 4.7 percent after the warning its dividend would be significantly cut for the first time since it listed in 2006.
The company also forecast underlying pretax profit around the mid-point of a wide analysts' range of 78-125 million pounds for the year to end-February.
With a volatile and demanding trading environment, sales at catalogue-based Argos stores open more than a year fell 8.8 percent in the 18 weeks to December 31, with gross margin down 0.5 percentage points.
That compares with a second-quarter like-for-like sales fall of 8.6 percent, and analysts' forecasts for a fall of 8-10 percent.
A weak consumer electronics market, particularly in video gaming and audio, accounted for the reduction in Argos' sales.
With British shoppers' disposable incomes squeezed by rising prices, muted wage growth and government austerity measures, store chains generally had a tough Christmas, using early sales to attract customers. They do not expect 2012 to be much better.
Every retailer has said so far how difficult next year will be, and we don't differ from that, said Duddy.
Argos, facing intense competition from supermarkets, specialists and internet players, has been particularly hard hit because its predominantly low-income customers are suffering the most severe of budget squeezes.
With 40 percent of Argos' sales now made over the Internet and 10 percent of internet sales made via smartphones, Duddy's strategy is to invest in a variety of purchasing options for customers.
He stressed a key driver of growth in this area was Argos' online Check & Reserve service, which requires in-store pick-up.
Some analysts remain unconvinced. Any plans to do anything other than try and trade their way out of trouble remain very thin, said Liberum analyst Simon Irwin.
We see few signs of improvement in the (trading) environment in the year ahead, and we still believe Home Retail needs a much more radical approach to its store portfolio and customer proposition.
However, Finance Director Richard Ashton said none of Argos' 759 stores is losing money.
Any closure of stores (apart from when leases expire) would come with a massive restructuring cost which really wouldn't make any financial sense ... It's a point we keep making: certain people get it, certain people don't, he said.
Home Retail also owns Homebase, the UK's second largest do-it-yourself chain. Here, third-quarter like-for-like sales fell 2.6 percent. That compared with analysts' forecasts of flat to down 5.4 percent. Gross margin was up 0.25 percentage points.
Shares in Home Retail were down 4 pence at 83.1 pence at 1037 GMT, valuing the business at about 675 million pounds.
Home Retail also said it would close its four-store UK homewares trial HomeStore&More at a cost of 10 million pounds.
Also on Thursday, Tesco, Britain's biggest retailer, issued a profit warning after reporting its worst Christmas performance for decades.
(Editing by Matthew Scuffham and David Hulmes)